Micron Earnings: Rocketing AI Demand

Core Insights - Micron's financial performance in Q3 2025 showed significant growth, with revenue increasing by 37% year over year and adjusted earnings per share (EPS) more than tripling, primarily driven by high demand for data center memory chips [2][3]. Financial Performance - Revenue for Q3 2025 was reported at $9.3 billion, up from $6.8 billion in Q3 2024, marking a 37% increase [2]. - Adjusted EPS rose to $1.91 from $0.62, reflecting a 208% increase [2]. - Adjusted gross margin improved to 39% from 28.1%, a rise of 10.9 percentage points [2]. - Adjusted free cash flow surged to $1.95 billion from $0.43 billion, a 359% increase [2]. Market Dynamics - The demand for high-bandwidth memory (HBM), particularly for AI accelerators, contributed to a 50% revenue growth in this segment from the previous quarter [3]. - Overall DRAM revenue increased by 51% year over year to $7.1 billion, with bit shipments up 20% from the prior quarter [5]. - NAND revenue saw a modest increase of 4% year over year to $2.2 billion, with a significant rise in bit shipments but a decline in average selling prices [5]. Future Outlook - For Q4 2025, Micron anticipates revenue between $10.4 billion and $11.0 billion, with an adjusted gross margin of approximately 42% and adjusted EPS between $2.35 and $2.65 [6]. - The company is ramping up production of its HBM3E 12H product and expects its HBM market share to align with its overall DRAM market share in the latter half of the calendar year [4]. Market Reaction - Following the earnings report, Micron's shares rose approximately 4% in after-hours trading, reflecting positive market sentiment due to strong earnings and optimistic guidance [7]. Strategic Positioning - Micron is making strides in the HBM market, with its market share approaching that of its overall DRAM market share [8]. - While there are mixed signals regarding pricing for DRAM and NAND chips, strong demand from the AI sector is expected to bolster Micron's performance despite potential pricing pressures in other markets [8].