Micron’s 93% revenue growth draws investors’ attention. The uptrend is just beginning

Micron Technology Inc. (NYSE: MU) has recovered from last year’s losses and is rapidly increasing revenues and net income growth, surprising market participants and exceeding expert forecasts. The previous quarter’s report, released on 25 September, shows a 93% revenue increase. Given this context, is it wise to invest in Micron stock?

The article provides a fundamental analysis of Micron, describes its business model, explores the 2025 outlook for the semiconductor market, and includes a technical analysis of Micron stock based on the price forecast for the end of 2024.

About Micron Technology Inc.

Founded in 1978, Micron Technology Inc. is a US company that develops and produces memory chips (DRAM, NAND) and provides technology solutions for data storage. Micron is one of the world’s largest electronic memory producers, and its products are used in cars, computers, mobile devices, servers, and other electronic devices. The company went public on the New York Stock Exchange in 1984 and trades under the MU ticker.

Today, Micron continues to develop and deploy advanced memory modules and data storage technologies for the Artificial Intelligence, 5G networks, autonomous vehicles, and cloud computing markets.

Micron Technology Inc.’s business model

Micron’s business model centres on developing, producing, and selling semiconductor memory modules and data storage solutions. The company’s segments are categorised by the product markets listed below:

• Personal computers and devices: this includes sales of memory for PCs, laptops, and workstations
• Mobile devices: memory chips for smartphones and tablets, where Micron competes against companies producing similar products for high-performance devices
• Storage devices: products and solutions for NAND flash memory-based data storage
• Embedded systems: memory components and modules for integration into systems used in the automotive and healthcare sectors, as well as the manufacturing industry

The company provides detailed data for each segment and aggregates them into two major sectors in its report. The first sector is DRAM (Dynamic Random-Access Memory), which accounts for a substantial share of the company’s revenues (about 70%). DRAM is used in personal computers, servers, smartphones, graphics cards, and other devices. The second sector, NAND (flash memory), accounts for about 25-30% of revenues. NAND products are used in SSD (solid-state drives), mobile devices, data storage systems, and other products requiring rapid and reliable access to information.

Micron Technology Inc.’s Q4 2024 report

On 25 September 2024, Micron released its Q4 2024 report, which covered the period ending on 25 August. The company’s financial performance surprised investors and exceeded forecasts. Below is the reported data:

• Revenue: 7.75 billion USD (+93%)
• Net income: 1.34 billion USD compared to a loss of 1.17 billion USD
• Earnings per share: 1.18 USD compared to a loss of 1.07 USD
• Operating profit: 1.74 billion USD compared to a loss of 1.20 billion USD

Revenue by segment:

• DRAM: 5.33 billion USD (+69%)
• NAND: 2.36 billion USD (+31%)
• Compute and Networking: 3.01 billion USD (+152%)
• Mobile: 1.87 billion USD (+55%)
• Storage: 1.68 billion USD (+127%)
• Embedded: 1.17 billion USD (+36%)

The company enjoyed significant growth across all segments, which propelled Micron stock by more than 18%.

Comments from Micron Technology Inc.’s management

After announcing the Q4 2024 financial results, Micron’s management underscored an impressive 93% revenue growth from the previous year, driven by strong demand for DRAM products for data centres and record NAND sales, which exceeded 1 billion USD per quarter for the first time.

Micron’s CEO, Sanjay Mehrotra, noted that Micron has the best competitive positioning in its entire history and forecasted record revenue and profitability figures in Q1 2025. He also emphasised the importance of demand for artificial intelligence solutions, which helps strengthen the company’s position in the market.

Micron Technology Inc.’s forecast for Q1 2025

Micron expects record revenue in Q1 2025, forecasting income of 8.70 billion USD (plus or minus 200 million USD) and a gross margin of 39.5%. The anticipated earnings per share will amount to 1.74 USD. These figures are considerably higher than in previous quarters, indicating growth in demand for the company’s products, particularly in the artificial intelligence and cloud computing segments.

Micron also noted that it continues to benefit from rising prices in memory and data storage markets related to increased demand for AI servers.

Key reasons behind Micron Technology Inc.’s revenue growth

Micron was a loss-making company in 2023, but everything drastically changed in 2024. What happened during this period, and how did the company generate profit?

The semiconductor market experienced a severe downturn in 2023 due to several factors. The primary reason was a sharp decline in demand for consumer electronics, including personal computers and smartphones, following significant growth during the pandemic. This downturn led to an accumulation of surplus products, particularly in Micron’s DRAM and NAND memory segments. Consequently, product prices fell significantly (as did the company’s revenue), ultimately leading to losses.

In 2024, the situation changed radically as the demand for DRAM and NAND chips increased sharply. The primary growth driver was DRAM memory modules for data centres, especially for tasks related to artificial intelligence and high-performance computing.

Following the decline in prices for electronic memory components in 2023, a recovery began, particularly in the DRAM segment, which directly contributed to revenue and profitability growth.

In 2023, Micron was forced to undertake business optimisation amid falling revenues. The company’s management implemented measures to reduce costs, resulting in improved operating margins. Consequently, the cost-cutting and production optimisation program significantly improved financial performance in 2024.

All these factors combined positively affected the company’s financial performance, allowing it to deliver stronger-than-forecasted results.

The outlook for the 2025 semiconductor market

According to World Semiconductor Trade Statistics (WSTS) data, the 2025 global semiconductor market forecast looks promising. A 12.5% increase is expected, bringing the total market volume to 687 billion USD. The main contributors to this growth will be the memory (particularly DRAM and NAND) and logic chips sectors, with increases of over 25% and 10%, respectively. Key markets, such as the US and the Asia-Pacific region, will continue to show double-digit growth rates, while Europe and Japan are expected to post more modest results. This is a positive outlook for Micron, as the memory component market remains the company’s primary source of revenue.

Technical analysis and forecast for Micron Technology Inc. shares

With expectations of Micron returning to profitability between January and June 2024, its share price surged by 90%, reaching a historical maximum of 157 USD. The company published its quarterly earnings report in May, posting quarterly profit for the second consecutive time. After this, the excitement surrounding the shares became a sell-off as investors moved to secure their profits. Against this backdrop, the stock prices fell sharply, dropping by 45% by August. Investors now need a new reason to buy the shares. Since August 2024, Micron’s shares have traded within the 85 to 111 USD range. The quarterly report published on 25 September triggered a sharp increase in the share price, resulting in a breakout above the 111 USD resistance level; however, the prices could not hold above this mark. As a result, the share price dropped back to 100 USD. Based on this information, two scenarios are considered.

The optimistic forecast for Micron shares in 2024 suggests a price decline to the support level of 96 USD, followed by a rebound and an increase to 111 USD. A breakout above the 111 USD resistance level would trigger further price growth towards 130 USD. This forecast is the most likely, as the company expects continued revenue and net profit growth, and the semiconductor market outlook for 2025 also indicates sustained demand for its products.

The pessimistic forecast for Micron shares in 2024 implies that the share price will stabilise within a trading range. A breakout below the support level of 96 USD would lead to a price decline towards 85 USD. A rebound from this level would catalyse a price increase to the upper boundary of the range at 111 USD.

Summary

Micron’s Q3 2024 revenue reached 6.81 billion USD, and the stock price was 40% higher than before the release of the Q4 2024 report, which indicated 7.75 billion USD in revenue. It is now evident that Micron’s stock was overbought in May.

In October 2024, Micron’s (MU) stock price became more attractive for investment, as evidenced by increasing demand for the company’s shares whenever the price was below 100 USD.

The fundamental analysis of MU indicates the company’s revenue and income growth potential. However, maintaining a high growth rate of financial revenues in the future, equivalent to Q4 2024, will undoubtedly be challenging. As a result, volatility in the company’s stock may gradually decline. This development can be viewed positively since, if the uptrend begins from the current levels, the price movement will be smoother, without sharp declines and surges, as has been the case since the beginning of 2024.