Micron Technology(US:MU)2025-07-01 00:40Investment Rating - The report maintains an Overweight rating for Micron Technology [2][10][17] Core Insights - Micron Technology reported strong results for the May quarter, driven by robust demand in High Bandwidth Memory (HBM) and data center applications, with HBM revenue increasing by 50% quarter-over-quarter to over $1.5 billion [1][17] - The company anticipates continued strength in demand and pricing dynamics, projecting a revenue increase of 15% quarter-over-quarter for the August quarter, reaching $10.7 billion [1][17] - Micron's gross margin for the May quarter was 39%, exceeding guidance and consensus, and is expected to rise to 42% in the August quarter [1][17] - The HBM market share is expected to align with Micron's overall global DRAM share in the second half of the calendar year, with HBM revenues projected to approach an annualized run rate of $8 billion [1][17] - The company is increasing its forward estimates and raising its price target to $165, based on anticipated earnings power in the second half of calendar year 2026 [1][10][17] Summary by Sections Financial Performance - For the May quarter (F3Q25), Micron reported revenues of $9.3 billion, a 15.5% increase quarter-over-quarter, and a net income of $2.18 billion [19][20] - The adjusted EPS for FY25 is revised to $7.75 from $6.80, with FY26 estimates initiated at $12.98 [2][21] Market Dynamics - The report highlights improving supply and demand dynamics in the DRAM market, with expectations of tight DRAM inventories persisting through the end of the calendar year [1][17] - Micron's HBM revenue is on track for $2 billion in the second half of CY25, supported by strong demand from AI infrastructure [1][17] Valuation - The price target of $165 is based on an annualized earnings power of approximately $15.00 in the second half of CY26, applying a 10-12x multiple [12][10] - The report indicates that Micron's increasing product and end-market diversification will help reduce revenue and earnings volatility [10][11]