Core Viewpoint - Micron Technology reported solid earnings, yet its stock price declined the day after the announcement [1] Group 1 - The stock price used for analysis was from the afternoon of March 19, 2025 [1] - The video discussing the earnings was published on March 21, 2025 [1]

Group 1 - Micron Technology, Inc. has experienced significant volatility in its stock price over the past six months, with shares currently up just over 1% [1] - The analysis is conducted by Noah's Arc Capital Management, which focuses on 20th-century stocks undergoing transformation in the 21st century [1] - The firm seeks to identify innovations in business models that could lead to dramatic changes in stock performance [1] Group 2 - The article does not provide specific financial metrics or performance data related to Micron Technology, Inc. or the broader industry [1]

Core Viewpoint - Micron Technology's stock is considered a buy despite a recent 7% decline, as the company exceeded earnings expectations in its fiscal Q2 2025 report [1][4]. Financial Performance - Micron reported a revenue increase of 38% year over year, reaching over $8 billion, but experienced a sequential decline of 7.6% from Q1 [2]. - Non-GAAP earnings were $1.56 per share, surpassing analyst expectations, while GAAP earnings were $1.41 per share, nearly doubling from $0.71 a year ago [2]. - Operating cash flow more than tripled compared to the previous year [2]. Cash Flow and Guidance - The company's free cash flow remains slightly negative at $75 million, but is showing signs of improvement [3]. - CEO Sanjay Mehrotra anticipates record quarterly revenue in fiscal Q3, driven by growth in DRAM and NAND demand across data center and consumer markets [4]. Future Projections - Micron forecasts Q3 sales of approximately $8.8 billion, with non-GAAP profit expected at $1.57 per share and GAAP earnings at $1.37 per share [5]. - These projections indicate that Micron is on track to exceed earnings expectations for the fifth consecutive quarter [5]. Valuation Perspective - The stock is currently valued at only 15 times analyst forecasts for the year, suggesting it is undervalued given its performance [6].

Investment Rating - The report maintains a "Buy" rating for the company, anticipating benefits from improved supply-demand dynamics in the storage industry [4]. Core Insights - The company reported FY25Q2 revenue of $8.05 billion, a 7.5% decrease quarter-over-quarter but a 38.3% increase year-over-year. GAAP net profit was $1.583 billion, down 15.3% quarter-over-quarter but up 99.6% year-over-year [1]. - The company is actively controlling production capacity, which, combined with increased consumption of DRAM by HBM, is expected to improve supply-demand conditions [2]. - The company forecasts a 15% to 20% growth in DRAM bit volume and low double-digit growth in NAND bit volume for 2025, with a mid-term CAGR of around 15% for both DRAM and NAND [2]. - The company expects data center server shipment growth in 2025 to be in the mid-single digits, driven by strong AI demand, with the HBM market projected to exceed $35 billion [3]. - The company projects FY25 revenues of $8.8 billion, with GAAP gross margins of approximately 35.5% and non-GAAP gross margins of about 36.5% [1]. Summary by Sections Performance Review - FY25Q2 revenue was $8.05 billion, with a GAAP gross margin of 36.8% and a non-GAAP gross margin of 37.9%. The company expects FY25Q3 revenue to be around $8.8 billion [1]. Operational Analysis - The company is focusing on production control, with expectations that DRAM and NAND supply growth will be below industry growth rates. The NAND wafer capacity is expected to decrease by 10% by the end of FY25 compared to FY24 [2]. Market Outlook - The company anticipates a mid-single-digit growth in PC shipments and low single-digit growth in mobile shipments for 2025, with a recovery in data center NAND shipments expected in the coming months [3]. Profit Forecast and Valuation - Projected net profits for FY25, FY26, and FY27 are $6.282 billion, $9.606 billion, and $9.987 billion, respectively, with corresponding P/B ratios of 2.25, 1.91, and 1.65 [4].

Core Viewpoint - Micron Technology reported strong fiscal Q2 2025 earnings, with significant year-over-year growth in both earnings per share and revenues, driven by high demand for its high bandwidth memory products [1][2]. Financial Performance - Earnings per share for Q2 fiscal 2025 were $1.56, exceeding the Zacks Consensus Estimate by 9.1% and up 271% from the previous year's earnings of $0.42 [1] - Revenues increased by 38.3% year over year to $8.05 billion, surpassing the Zacks Consensus Estimate by 1.97% [2] - Non-GAAP gross profit reached $3.05 billion, a significant increase from $1.16 billion in the year-ago quarter, although it declined 11.3% sequentially [7] - Non-GAAP gross margin improved to 37.9% from 20% year over year but decreased from 39.5% in the previous quarter [7][9] Revenue Breakdown - DRAM revenues were $6.1 billion, accounting for 76% of total revenues, up 47.3% year over year but down 4.3% sequentially [4] - NAND revenues totaled $1.86 billion, representing 23% of total revenues, up 18.4% year over year but down 17.2% quarter over quarter [4] - Revenues from the Compute and Networking Business Unit soared 109% year over year to $4.56 billion [5] - Mobile Business Unit revenues declined 33% year over year to $1.07 billion due to customer inventory adjustments [6] Cash Flow and Balance Sheet - The company ended the quarter with cash and investments of $8.22 billion, up from $7.58 billion in the prior quarter [10] - Operating cash flow for the quarter was $3.94 billion, with capital expenditures of $3.09 billion, resulting in adjusted free cash flow of $857 million [11] Future Outlook - Micron anticipates Q3 fiscal 2025 revenues of $8.80 billion (+/- $200 million), above the Zacks Consensus Estimate of $8.47 billion [12] - Projected non-GAAP gross margin for Q3 is 36.5% (+/- 100 basis points) [12] - Adjusted EPS for Q3 is expected to be $1.57 (+/- 10 cents), contrasting with a consensus loss estimate of $1.48 per share [13]

Financial Performance - Micron Technology Inc reported second-quarter revenue of $8.05 billion, exceeding the consensus estimate of $7.89 billion and up from $5.82 billion year-over-year [1] - The company reported adjusted earnings of $1.56 per share, surpassing analyst estimates of $1.42 per share [1] Future Guidance - Micron expects third-quarter revenue of $8.8 billion, with a variance of plus or minus $200 million, compared to estimates of $8.49 billion [2] - The company anticipates third-quarter adjusted earnings of $1.57 per share, with a variance of plus or minus 10 cents, versus estimates of $1.47 per share [2] Analyst Ratings and Price Targets - Morgan Stanley analyst Joseph Moore maintained an Equal-Weight rating and raised the price target from $91 to $112 [4] - Rosenblatt analyst Kevin Cassidy maintained a Buy rating but lowered the price target from $250 to $200 [4] - Baird analyst Tristan Gerra maintained an Outperform rating and raised the price target from $130 to $163 [4] Market Reaction - Following the earnings announcement, Micron shares fell 8% to trade at $94.77 [2]

Financial Data and Key Metrics Changes - Total fiscal Q2 revenue was approximately $8.1 billion, down 8% sequentially and up 38% year-over-year [43] - Fiscal Q2 DRAM revenue was $6.1 billion, up 47% year-over-year, representing 76% of total revenue [43] - Fiscal Q2 NAND revenue was $1.9 billion, up 18% year-over-year, representing 23% of total revenue [44] - Consolidated gross margin for fiscal Q2 was 37.9%, down 160 basis points sequentially [48] - Fiscal Q2 adjusted EBITDA was $4.1 billion, resulting in an EBITDA margin of 50.7%, up 10 basis points sequentially [49] Business Line Data and Key Metrics Changes - Compute and Networking business unit revenue was up 4% sequentially to $4.6 billion, reaching 57% of total revenue [45] - Storage business unit revenue was $1.4 billion, down 20% sequentially due to lower storage investments from data center customers [46] - Mobile business unit revenue was $1.1 billion, down 30% sequentially as mobile customers improved their inventory positions [47] - Embedded business unit revenue was $1 billion, down 3% sequentially due to inventory improvement initiatives at automotive customers [47] Market Data and Key Metrics Changes - Data center DRAM revenue reached a new record, with HBM revenue growing more than 50% sequentially to over $1 billion [10] - The company projects mid-single-digit server unit growth in calendar 2025, with strong demand for HBM [18] - The PC market is expected to grow mid-single digits in unit terms in calendar 2025, driven by AI applications [28] - Smartphone unit volume growth in calendar 2025 remains at low single-digit percentages [30] Company Strategy and Development Direction - The company is focused on growing HBM capacity in existing manufacturing facilities to meet requirements through 2026 [14] - Investments include a new HBM advanced packaging facility in Singapore and a new DRAM fab in Idaho [15] - The company aims to maintain its leadership position in low-power DRAM for servers as it transitions to SOCAMM form factor [24] - The strategy includes disciplined investments to capitalize on growth opportunities driven by AI [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market dynamics with disciplined investments and a focus on high-value products [60] - The company anticipates record revenue and improved profitability in fiscal 2025 [60] - Management noted that AI adoption is a significant driver for increased demand across various markets [30][91] - The company expects to generate multibillion dollars in HBM revenue in fiscal 2025 [22] Other Important Information - The company expects fiscal Q3 revenue to be approximately $8.8 billion, with a gross margin in the range of 36.5% [57] - Capital expenditures for fiscal 2025 are projected to be approximately $14 billion, focusing on HBM and facility construction [40] - The company ended fiscal Q2 with $9.6 billion in cash and investments, maintaining $12.1 billion of liquidity [52] Q&A Session Summary Question: Will gross margins improve in fiscal Q4? - Management indicated that while fiscal Q3 gross margins are expected to be lower, they anticipate improvements in fiscal Q4 due to better market conditions and growth in high-value products [66][70] Question: What is driving the increased industry bit demand outlook for DRAM? - Management noted that improved customer inventory levels and the growing presence of AI in smartphones and PCs are contributing to the increased demand outlook for DRAM [71][72] Question: How much of the fiscal Q3 revenue growth is expected from DRAM versus NAND? - Management confirmed that the growth bias will be primarily from DRAM, particularly due to HBM and data center exposure [79] Question: How sustainable are the recent improvements in memory prices? - Management highlighted that demand trends are improving, particularly in DRAM and NAND, driven by customer inventory adjustments and strong data center demand [90][92] Question: What is the impact of HBM technology transitions on gross margins? - Management stated that while there may be initial yield challenges with new HBM technologies, they expect the transition to be accretive to DRAM margins over time [96][98]

Investment Rating - The report maintains a "Buy" rating for the company, anticipating benefits from improved supply-demand dynamics in the storage industry [4]. Core Insights - The company reported FY25Q2 revenue of $8.05 billion, a 7.5% decrease quarter-over-quarter but a 38.3% increase year-over-year. GAAP net profit was $1.583 billion, down 15.3% quarter-over-quarter but up 99.6% year-over-year [1]. - The company is actively controlling production capacity, expecting improvements in supply-demand balance for DRAM and NAND markets. The DRAM market is projected to grow by 15%-20% in 2025, while NAND is expected to see low double-digit growth [2]. - The company anticipates strong demand for HBM (High Bandwidth Memory), with the HBM market expected to exceed $35 billion in 2025. The demand for HBM remains robust, with the company already sold out for 2025 [3]. Summary by Sections Performance Review - FY25Q2 revenue was $8.05 billion, with a GAAP gross margin of 36.8% and a GAAP net profit of $1.583 billion. DRAM revenue was approximately $6.1 billion, while NAND revenue was about $1.9 billion [1]. Operational Analysis - The company is focusing on production control, with expectations that its DRAM and NAND supply growth will be below industry averages. The company plans to reduce NAND wafer capacity by 10% by the end of FY25 [2]. Market Outlook - The data center server shipment growth is expected to be in the mid-single digits, driven by strong AI demand. The PC market is projected to grow in the low single digits, with AI PCs requiring at least 16GB of memory, which will boost DRAM demand [3]. Profit Forecast and Valuation - The company is projected to achieve net profits of $6.282 billion, $9.606 billion, and $9.987 billion for FY25, FY26, and FY27, respectively. The corresponding price-to-book ratios are expected to be 2.25, 1.91, and 1.65 [4].

Revenue Performance - Total revenue for Q2 2025 was $8,053 million, a decrease of 8% compared to Q1 2025, but an increase of 38% compared to Q2 2024[121][122][123]. - Total revenue for the first six months of 2025 increased by 59% compared to the same period in 2024, driven by increases in both DRAM and NAND sales[124]. DRAM and NAND Revenue - DRAM revenue decreased by 4% in Q2 2025 due to a high-single-digit percent decrease in bit shipments, partially offset by a mid-single-digit percent increase in average selling prices[125]. - NAND revenue declined by 17% in Q2 2025, primarily due to a high-teens percent decrease in average selling prices, despite modestly higher bit shipments[125]. Segment Revenue Changes - CNBU revenue increased by 4% in Q2 2025, primarily due to higher sales of HBM products, which increased more than 50%[129]. - SBU revenue decreased by 20% in Q2 2025 due to lower storage investments by data center customers and overall NAND pricing declines[129]. - MBU revenue decreased by 30% in Q2 2025, attributed to lower bit shipments as mobile customers reduced inventories[129]. - EBU revenue decreased by 3% in Q2 2025, primarily due to lower automotive sales as customers managed inventories[129]. - CNBU revenue for Q2 2025 was $1.919 billion, a 42% increase from Q1 2025, while SBU revenue decreased to $24 million, a 2% decline[130]. Gross Margin and Expenses - Gross margin for Q2 2025 was 37%, down from 38% in Q1 2025, but improved from 19% in Q2 2024, driven by increased average selling prices and manufacturing cost reductions[127]. - Research and development expenses for Q2 2025 were $898 million, representing 11% of total revenue[121]. - R&D expenses for Q2 2025 increased by 8% compared to Q2 2024, primarily due to higher employee compensation and subcontractor expenses[133]. - SG&A expenses for Q2 2025 rose by 2% compared to Q2 2024, mainly driven by increased employee compensation[134]. Cash and Investments - Cash and marketable investments totaled $9.59 billion as of February 27, 2025, up from $9.15 billion as of August 29, 2024[141]. - The company plans to invest approximately $14 billion in capital expenditures for 2025, focusing on property, plant, and equipment[144]. - The company received $1.03 billion in government incentives to offset capital expenditures in the first half of 2025[153]. Cash Flow and Financing Activities - Net cash provided by operating activities for the first six months of 2025 was $7.186 billion, significantly higher than $2.620 billion in the same period of 2024[151]. - For the first six months of 2025, net cash used for investing activities was $7.26 billion, primarily for property, plant, and equipment[153]. - In comparison, for the first six months of 2024, net cash used for investing activities was $3.18 billion, indicating a year-over-year increase of approximately 128.3%[154]. - For the first six months of 2025, net cash used for financing activities was $2.63 billion, which included $2.63 billion in debt repayments and $261 million in dividend payments[155]. - In the first six months of 2024, net cash used for financing activities was $1.10 billion, showing an increase of approximately 139.1% year-over-year[155]. Tax and Capacity Planning - The effective tax rate for Q2 2025 was 10.1%, compared to 13.2% in Q1 2025, reflecting changes in profitability[136]. - The company expects to add new DRAM wafer capacity to meet projected memory demand in the second half of the decade[144]. - The company has entered into funding agreements for up to $6.1 billion under the CHIPS Act for planned fabs in Idaho and New York[145]. Debt and Market Risk - The company reported $1.68 billion in proceeds from the issuance of the 2029 Term Loan A in the first half of 2025[155]. - The company had approximately $1.00 billion in proceeds from the issuance of the 2035 Notes during the same period[155]. - There have been no significant changes to critical accounting estimates since the Annual Report for the year ended August 29, 2024[156]. - The company reported no material changes to market risk during the six months ended February 27, 2025[157]. - The company continues to monitor sensitivity analysis related to changes in interest rates and currency exchange rates as part of its market risk assessment[157].

Core Insights - Micron reported revenue of $8.05 billion for the quarter ended February 2025, marking a 38.3% increase year-over-year and exceeding the Zacks Consensus Estimate by 1.97% [1] - The company's EPS was $1.56, significantly up from $0.42 in the same quarter last year, surpassing the consensus estimate of $1.43 by 9.09% [1] Revenue Breakdown by Technology - DRAM revenue reached $6.12 billion, slightly below the average estimate of $6.20 billion, reflecting a year-over-year increase of 47.3% [4] - Other technology revenue (primarily NOR) was reported at $75 million, falling short of the average estimate of $93.87 million, representing a year-over-year decline of 24.2% [4] - NAND revenue was $1.86 billion, exceeding the average estimate of $1.60 billion, with a year-over-year growth of 18.4% [4] Stock Performance - Over the past month, Micron's shares have returned -2.2%, compared to a -7.5% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]