Micron Beats on Q3 Earnings: Will Strong Guidance Uplift the Stock?

Core Insights - Micron Technology reported strong third-quarter fiscal 2025 earnings of $1.91 per share, exceeding the Zacks Consensus Estimate by 20.13% and showing a year-over-year increase of 208.1% from $0.62 [1][8] - Revenues for the third quarter reached $9.30 billion, a 37% increase year over year, also surpassing the Zacks Consensus Estimate by 5.3%, driven by high demand for high bandwidth memory (HBM) products [1][2] Financial Performance - DRAM revenues were $7.1 billion, accounting for 76% of total revenues, marking a 51% year-over-year increase and a 15% sequential increase, with record demand for data center DRAM [3][4] - NAND revenues totaled $2.2 billion, representing 23% of total revenues, up 4% year over year and 16% quarter over quarter [3] - Other revenues were $75 million, up from $54 million year over year, remaining flat sequentially [4] Business Segment Performance - The Compute and Networking Business Unit generated $5.1 billion in revenues, soaring 96.2% year over year and 11% sequentially, driven by a more than 50% sequential increase in HBM revenues [4] - The Mobile Business Unit's revenues were $1.6 billion, flat year over year but up 45% quarter over quarter due to reduced customer inventories [5] - The Embedded Business Unit's revenues were $1.2 billion, down 7.7% year over year but up 20% sequentially [6] - Revenues from the Storage Business Unit totaled $1.5 billion, increasing 7.1% year over year and 4% sequentially [6] Operating Metrics - Micron's non-GAAP gross profit for the third quarter was $3.62 billion, significantly up from $1.92 billion year over year, with a non-GAAP gross margin of 39%, improving from 28.1% in the year-ago quarter [7][9] - Non-GAAP operating income was $2.49 billion, higher than the previous quarter's $2.01 billion and significantly improved from $941 million year over year [9] Cash Flow and Balance Sheet - Micron ended the quarter with cash and investments of $10.81 billion, up from $8.22 billion in the prior quarter, and total liquidity of $15.7 billion, an increase from $12.1 billion [10] - The company generated an operating cash flow of $4.61 billion and spent $2.7 billion on capital expenditures, resulting in an adjusted free cash flow of $1.95 billion [11] Future Outlook - For the fourth quarter of fiscal 2025, Micron anticipates revenues of $10.7 billion (+/-$300 million), significantly above the Zacks Consensus Estimate of $9.90 billion, with a projected non-GAAP gross margin of 42% [12][13] - Adjusted EPS is expected to be $2.50 (+/- 15 cents), contrasting with the consensus mark of a loss of $2.02 per share [13]