Micron Technology, Inc. MU is set to release its second-quarter fiscal 2025 results after the market closes on March 20, and the company is likely to deliver another robust performance. Powered by surging artificial intelligence (AI) investments and key partnerships with tech giants, Micron is emerging as a critical player in the ongoing semiconductor transformation. However, persistent weakness in its NAND business is likely to have partially offset the benefits of strong momentum in the DRAM business.
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AI Boom Fuels Micron’s DRAM Sales in Q2
Micron has found itself in a sweet spot amid the AI revolution, which is driving skyrocketing demand for memory and storage solutions. AI systems — particularly large language models (LLMs) and generative AI applications — require massive data processing and storage capabilities, creating a growing need for high-performance DRAM.
Micron’s DRAM segment is expected to be the star of its second-quarter report. The Zacks Consensus Estimate pegs DRAM revenues at $6.2 billion, marking stellar 32.2% year-over-year growth.
This not only underscores Micron’s market strength but also highlights the improved pricing dynamics in the DRAM industry. After struggling with oversupply issues in previous quarters, the memory market is showing signs of stabilization, which has strengthened pricing power and boosted Micron’s margins.
Moreover, Micron’s recent mass production of its HBM3E (high-bandwidth memory) for NVIDIA Corporation’s NVDA next-generation AI chips, including the H200 GPUs, has positioned it as a vital supplier for AI powerhouses. With HBM memory in short supply and NVIDIA driving relentless AI demand, Micron’s pricing leverage for these premium products is likely to be a major DRAM revenue booster in the second quarter.
Micron Technology, Inc. Price and EPS Surprise
Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote
Strategic Tech Partnerships Bolster Micron’s Growth
Micron’s expanding partnerships with tech heavyweights like NVIDIA and Marvell Technology, Inc. MRVL are providing it with both revenue stability and market credibility. Its collaboration with NVIDIA has deepened significantly.
The company’s HBM3E chips are integral to NVIDIA’s AI roadmap, particularly as the GPU leader rolls out its highly anticipated H200 and B200 models. Micron is likely to have capitalized on this massive AI infrastructure buildout in the to-be-reported quarter.
Micron’s partnership with Marvell on custom HBM solutions is equally promising. Marvell, which specializes in custom AI silicon and XPUs, has integrated Micron’s memory technologies into its high-performance computing platforms. This collaboration not only boosts Marvell’s AI capabilities but also drives higher memory sales for Micron.
These alliances strengthen Micron’s positioning in the AI and data center ecosystem, ensuring it remains a critical supplier amid the sector’s expansion.
Micron’s NAND Business Remains a Weak Spot
While AI-fueled DRAM growth is promising, Micron’s NAND segment continues to be a drag on its financial performance. Despite some signs of modest pricing improvement in the first quarter, NAND still faces oversupply risks and sluggish profitability.
Micron’s management previously acknowledged that NAND pricing recovery is progressing slower than expected. Although sequential pricing gains are anticipated, the lack of meaningful margin expansion is anticipated to have hurt the company’s overall second-quarter earnings growth potential. The NAND market’s ongoing supply-demand imbalance makes it difficult for Micron to achieve the same pricing power it enjoys with DRAM.
Micron’s Zacks Rank & A Stock to Consider
Currently, Micron carries a Zacks Rank #4 (Sell).
A top-ranked stock in the broader technology sector is Amtech Systems, Inc. ASYS, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Amtech’s fiscal 2025 earnings has been revised upward by 2 cents to 17 cents per share in the past 60 days. ASYS shares have plunged 10.3% year to date.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
