Micron Technology(US:MU) Zhi Tong Cai Jing·2025-12-15 04:24Core Viewpoint - The upcoming Q1 earnings report from Micron Technology (MU.US) on December 17 is anticipated to clarify whether High Bandwidth Memory (HBM) is a cyclical commodity like traditional storage chips, which could impact the company's valuation increase of $200 billion since April [1]. Group 1: Earnings Expectations - Analysts expect Micron's Q1 earnings per share to reach $3.93, a significant increase from $1.79 in the same period last year [1]. - Revenue is projected to be $12.82 billion, reflecting a year-over-year growth of over 45% [1]. Group 2: Market Position and Business Strategy - Micron is currently leading the HBM market, with a market share increase of 330 basis points to 25.7%, achieving its target a year ahead of schedule [2]. - The company has exited its consumer-grade business to focus resources on the data center segment, which now contributes 56% of total revenue with a gross margin of 52% [4]. Group 3: HBM Business Growth - The core driver for Micron's growth in FY2025 is the rapid expansion of its HBM business, which is expected to generate $8 billion in annual revenue, accounting for 21% of total revenue of $37.4 billion [3]. - HBM prices have surged by 172% this year, with expected shipment volume growth of approximately 25% or more, creating a strong combination of rising average selling prices and shipment volumes [3]. Group 4: Future Capacity and Capital Expenditure - Investors are keen to hear about the "sold out" status of Micron's future HBM capacity in the upcoming earnings report, as discussions regarding HBM4 capacity are ongoing [6][8]. - Micron's capital expenditure guidance is expected to be around $18 billion, which is about 34% of the projected revenue for FY2026 [8]. Group 5: Analyst Sentiment and Valuation - Analysts have raised their price targets for Micron, with Deutsche Bank increasing its target from $200 to $280, citing the company's readiness to benefit from the next memory market cycle [10]. - The market is currently valuing Micron at 5.1 times its expected revenue for FY2026, indicating expectations of approximately 63% growth, which is 10% higher than the consensus revenue estimate of $57.4 billion [17]. Group 6: Market Outlook - The upcoming Q1 earnings report is expected to confirm that Micron's storage business continues to benefit from a super cycle, potentially ending market debates about its cyclical nature [18]. - Despite the positive long-term growth fundamentals, Micron's stock price has significantly increased in recent months, raising questions about future market reactions post-earnings [18].