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Micron's (MU) Q3 Earnings to Gain From Rising Investments in AI

Micron Technology, Inc. MU is scheduled to report third-quarter fiscal 2024 results after market close on Jun 26.

Micron stock has made a remarkable run this year so far, with the share price soaring 69.2%, outperforming the Zacks Computer and Technology sector’s growth of 25.7%. The uptick can be attributed to Micron’s back-to-back quarters of impressive financial performance and an improving demand-supply environment for memory chips.

The stock has a decent history of beating earnings estimates. It has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 69.6%.

Micron is poised for yet another strong financial performance in its upcoming third-quarter earnings, driven by rising investments in artificial intelligence (AI). As AI continues to revolutionize industries, the demand for high-performance memory and storage solutions is surging. Micron, with its advanced product portfolio, is capitalizing on this trend.

Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote

AI Investment to Aid Micron’s Q3 Results

The global AI market is expanding rapidly, with investments pouring into the development of AI technologies and infrastructure. AI applications require vast computational power and high-speed data processing, which depend heavily on advanced memory and storage solutions. Micron’s products, such as DRAM and NAND flash memory, are critical components in AI systems, providing the necessary speed and capacity for data-intensive tasks.

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The Zacks Consensus Estimate for DRAM revenues is pegged at $4.7 billion for the third quarter, which indicates a year-over-year increase of 75.9%. The consensus mark for NAND revenues stands at $1.82 billion, which implies a whopping 79.3% surge from the year-ago quarter.

The rising demand for AI hardware is likely to have translated into substantial revenue growth for Micron in the to-be-reported quarter. Its strong ties with industry leaders like NVIDIA Corporation NVDA, Advanced Micro Devices, Inc. AMD and Qualcomm Incorporated QCOM are resulting in increased orders for its memory solutions. As these companies expand their AI capabilities, they require more advanced memory products, directly benefiting Micron’s top line.

NVIDIA, a leader in AI and graphics processing units (GPUs), relies on Micron’s memory solutions to enhance the performance of its products. In February 2024, Micron began mass-producing high-bandwidth memory, namely HBM3E, for NVIDIA's latest AI chip. NVIDIA is expected to leverage the HBM3E to develop its H200 GPUs that will replace NVDA’s existing H100 chip.

Advanced Micro Devices’ growing presence in the AI and data center markets is another positive factor for Micron. Advanced Micro Devices’ high-performance processors and GPUs require robust memory solutions to maximize their capabilities. Micron’s cutting-edge memory technologies are essential in supporting AMD’s AI workloads, leading to increased orders and revenues for Micron. Earlier in June 2024, Micron revealed that AMD is going to test the samples of its recently launched GDDR7 graphic memory in the latter’s devices.

Qualcomm is also investing heavily in AI and machine learning, which is an upside for Micron. In early 2024, Micron announced that its automotive-grade memory and storage qualified for Qualcomm’s Snapdragon Digital Chassis in intelligent automotive services.

The growing demand for memory and storage solutions to support AI hardware from key customers like NVIDIA, Advanced Micro Devices and Qualcomm is likely to have boosted Micron’s overall financial performance in the third quarter.

Conclusion

Micron is set to experience significant growth in its third-quarter fiscal 2024 earnings, fueled by the rising investments in AI. As AI continues to advance, the need for high-performance memory solutions will only increase, providing Micron with ample opportunities to boost its financial performance. Investors should consider Micron’s strong positioning in the AI market and strategic partnerships with industry leaders as key factors driving its future growth and profitability.

Additionally, MU has a Zacks Rank #2 (Buy) and a Growth Score of B at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report

Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

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