Micron’s revenue hits record highs, but the stock falls – What is the catch?

Following the release of Micron Technology’s Q2 fiscal 2025 report, the share price once again fell to the support level of 85 USD.

On 20 March, Micron Technology, Inc. (NASDAQ: MU) reported stronger-than-expected financial results for Q2 fiscal 2025. Growth was primarily driven by robust demand for HBM chips used in AI data centres. Despite this positive performance, Micron’s shares dropped by 8% following the publication of the report due to investor concerns about shrinking gross margins and rising capital expenditures associated with the launch of a new chip manufacturing facility in Idaho.

This article examines Micron Technology, Inc., outlines its main revenue streams, reviews its Q2 fiscal 2025 performance, and analyses expectations for Q3 fiscal 2025. In addition, it provides a technical analysis of MU stock, forming the basis for the Micron stock forecast for 2025.

About Micron Technology, Inc.

Founded in 1978, Micron Technology Inc. is a US-based company that develops and manufactures memory chips (DRAM, NAND) and provides technology solutions for data storage. Micron is one of the world’s largest producers of electronic memory, with its products used in cars, computers, mobile devices, servers, and other electronic equipment. The company was listed on the New York Stock Exchange in 1984 and trades under the ticker MU.

Today, Micron continues to develop and deploy advanced memory modules and data storage technologies for the artificial intelligence, 5G networks, autonomous vehicle, and cloud computing markets.

Micron Technology, Inc.’s main revenue streams

Micron’s business model centres on developing, producing, and selling semiconductor memory modules and data storage solutions. The company’s segments are categorised by the product markets listed below:

• Personal computers and devices: this includes revenue from the sale of memory used in PCs, laptops, and workstations
• Mobile devices: memory chips for smartphones and tablets, where Micron competes against companies producing comparable products for high-performance devices
• Storage devices: products and solutions for NAND flash memory-based data storage
• Embedded systems: memory components and modules for integration into systems used in the automotive and healthcare sectors, as well as the manufacturing industry

The company provides detailed data for each segment and aggregates them into two major sectors in its report. The first sector is DRAM (Dynamic Random-Access Memory), which accounts for a substantial share of the company’s revenues (about 70%). DRAM is used in personal computers, servers, smartphones, graphics cards and other devices. The second sector, NAND (flash memory), accounts for about 25-30% of revenues. NAND products are used in SSDs (solid-state drives), mobile devices, data storage systems and other products requiring rapid and reliable access to information.

Micron Technology Inc. Q4 FY 2024 report

On 25 September 2024, Micron released its Q4 2024 report, which covered the period ending on 25 August. The company’s financial performance surprised investors and exceeded forecasts. Below is the reported data:

• Revenue: 7.75 billion USD (+93%)
• Net income: 1.34 billion USD compared to a loss of 1.17 billion USD
• Earnings per share: 1.18 USD compared to a loss of 1.07 USD
• Operating profit: 1.74 billion USD compared to a loss of 1.20 billion USD

Revenue by segment:

• DRAM: 5.33 billion USD (+69%)
• NAND: 2.36 billion USD (+31%)
• Compute and Networking: 3.01 billion USD (+152%)
• Mobile: 1.87 billion USD (+55%)
• Storage: 1.68 billion USD (+127%)
• Embedded: 1.17 billion USD (+36%)

After announcing the Q4 2024 financial results, Micron’s management underscored an impressive 93% revenue growth from the previous year, driven by strong demand for DRAM products for data centres and record NAND sales, which exceeded 1 billion USD per quarter for the first time.

Micron’s CEO, Sanjay Mehrotra, noted that Micron has the best competitive positioning in its entire history and forecasted record revenue and profitability figures in Q1 2025. He also emphasised the importance of demand for artificial intelligence solutions, which helps strengthen the company’s position in the market.

Micron expects record revenue in Q1 2025, forecasting income of 8.70 billion USD (plus or minus 200 million USD) and a gross margin of 39.5%. The anticipated earnings per share will amount to 1.74 USD. These figures are considerably higher than in previous quarters, indicating growth in demand for the company’s products, particularly in the artificial intelligence and cloud computing segments.

Micron also noted that it continues to benefit from rising prices in memory and data storage markets related to increased demand for AI servers.

Micron Technology Inc. Q1 FY 2025 report

On 18 December 2024, Micron published its Q1 fiscal 2025 report, covering the period ending on 28 November. Below are the report highlights:

• Revenue: 8.70 billion USD (+84%)
• Net income: 2.04 billion USD versus a loss of 1.05 billion USD
• Earnings per share: 1.79 USD versus a loss of 0.95 USD
• Operating profit: 2.39 billion USD versus a loss of 0.95 billion USD

Revenue by segment:

• DRAM: 6.40 billion USD (+73%)
• NAND: 2.32 billion USD (+26%)
• Compute and Networking: 4.40 billion USD (+153%)
• Mobile: 1.50 billion USD (+16%)
• Storage: 1.70 billion USD (+160%)
• Embedded: 1.10 billion USD (+6%)

Sanjay Mehrotra noted that data centres accounted for over 50% of revenue for the first time in the company’s history, driven by strong demand for AI memory chips. He also acknowledged the weakness in consumer segments such as PCs and smartphones but expressed confidence that growth would resume in the second half of the fiscal year.

For Q2 fiscal 2025, Micron issued guidance below Wall Street expectations, forecasting revenue of 7.90 billion USD (± 200 million USD) and EPS of 1.43 USD (± 0.10 USD). This forecast reflects the anticipated decline in DRAM and NAND revenue due to oversupply and sluggish consumer demand.

Investors reacted negatively to the outlook, with Micron’s stock falling by over 13% after the report was published.

Micron Technology Inc. Q2 FY 2025 report

On 20 March 2025, Micron released its Q2 fiscal 2025 report, covering the period ending on 27 February. Below are the report highlights:

• Revenue: 8.05 billion USD (+38%)
• Net income: 1.78 billion USD (+273%)
• Earnings per share: 1.56 USD (+323%)
• Operating profit: 2.01 (+800%)

Revenue by segment:

• DRAM: 6.12 billion USD (+47%)
• NAND: 1.85 billion USD (+18%)
• Compute and Networking: 4.60 billion USD (+153%)
• Mobile: 1.10 billion USD (+16%)
• Storage: 1.40 billion USD (+160%)
• Embedded: 1.00 billion USD (+6%)

Sanjay Mehrotra stated that data centre DRAM revenue reached a new record, while high-bandwidth memory chip (HBM) revenue grew by over 50% from the previous quarter, exceeding 1 billion USD. He emphasised Micron’s strong competitive position and success in high-margin product categories, citing an effective strategy and increasing demand for AI memory devices.

For Q3 fiscal 2025, Micron forecasts revenue of 8.6-9.0 billion USD and EPS of 1.47-1.67 USD. The gross margin is expected to decline to 36.5%, down by 1.5 percentage points from the previous quarter. This decrease is due to gains in sales of low-margin products in the consumer segment and continued oversupply in the NAND market, which puts pressure on prices.

Investor reaction was mixed. Following the release of the earnings report, Micron’s stock first gained over 5% in additional trading, reflecting optimism about robust performance. However, concerns about gross margin and increased inventories later sent the stock down by over 8%, making Micron one of the worst performers in the S&P 500 after the report release.

Expert forecasts for Micron Technology, Inc

• Barchart: 25 out of 32 analysts rated Micron Technology stock as a Strong Buy, three as a Moderate Buy, three as a Hold, and one as a Strong Sell. The high price target is 200 USD, while the low one is 75 USD
• MarketBeat: 21 out of 25 specialists assigned a Buy rating to the shares, while three gave a Hold recommendation, and one rated it as a Sell. The high price target is 200 USD, while the low one is 67 USD
• TipRanks: 21 out of 24 respondents gave a Buy rating to the stock, and three recommended it as a Hold. The high price target is 200 USD, while the low one is 84 USD
• Stock Analysis: out of 26 experts, nine rated the shares as a Strong Buy, 14 as a Buy, and three as a Hold. The high price target is 250 USD, while the low one is 84 USD

Micron Technology, Inc. stock price forecast for 2025

On the weekly timeframe, Micron’s stock behaviour has shown a cyclic pattern since 2016. After reaching a peak in 2018, the price fell by 55%, then hit another high, followed by a 50% correction. In 2024, the shares reached a new high again before declining by 47%. If this pattern persists, the correction may be nearing its end, with the price likely to resume its upward trajectory towards a new all-time high. The support level is at 84 USD, with resistance at 114 USD. Based on Micron’s stock performance, possible price movements in 2025 are as follows.

The primary forecast for Micron’s stock suggests a rebound from the 84 USD support level, followed by a rise to 114 USD.

The alternative forecast for Micron’s stock anticipates a further decline to 64 USD. In this scenario, the correction would reach 58%. A rebound from the 64 USD support level would indicate that the correction has concluded and would signal the resumption of growth, with the first target at 84 USD.

Risks of investing in Micron Technology, Inc. stock

Investing in Micron Technology’s stock involves several risks that may adversely impact the company’s income and revenue:

• Memory market cyclicality: the semiconductor industry, particularly the memory segment, is highly cyclical, with fluctuations in demand and prices. A prolonged downturn in segments like NAND and DRAM could lead to overstock, falling prices, and reduced profitability
• Intense competition in the industry: Micron faces fierce competition from major players like Samsung Electronics and SK Hynix. Constant investment in technology and innovation is vital in such a highly competitive environment. If the company fails to keep pace with industry developments, it may lose market share, leading to lower profitability
• Geopolitical tensions and trade restrictions: Micron operates in the global market and generates significant revenue outside the US. Geopolitical tensions, trade disputes, and cybersecurity compliance checks may restrain sales and operations. For example, Micron’s products have been scrutinised in China, highlighting the risks tied to international markets
• Operational efficiency and cost management: despite revenue growth, Micron faces ongoing operational efficiency challenges. High production costs suggest there may be opportunities for cost reductions. Optimising production processes and controlling expenses will be key to increasing profitability.

Investors must carefully consider these risks when evaluating investment in Micron Technology, as they could significantly impact the company’s financial performance and stock price.

Summary

Micron Technology’s Q2 fiscal 2025 results indicate a challenging situation. Over 1 billion USD in gains from HBM sales, driven by demand from AI data centres, underscore Micron’s strong position in this segment. However, issues with gross margin due to expenditures on launching new DRAM production facilities and lower flash memory prices present obstacles to profitability.

Despite these challenges, market participants remain optimistic about the company, noting its technological leadership and strategic positioning in the AI market. Given these factors, Micron will likely have the potential to resume growth if it can effectively manage costs and capitalise on the growing demand in the AI and data centre segments.