Micron Technology Q3 2024 Earnings Preview: Positioned for AI-Driven Growth in the Semiconductor Market

June 21, 2024

Strategic moves in buying technology stocks

Micron Technology, Inc. (NASDAQ: MU) is poised to exceed expectations for the third quarter of FY24 (Q3 2024), driven by strong pricing dynamics in the memory industry. Despite the potential volume impact from the recent earthquake in Taiwan, Micron’s strategic positioning in High Bandwidth Memory (HBM) for AI applications and a favorable supply-demand balance in DRAM and NAND markets are expected to fuel its performance.

Source: Micron’s Q2 2024 Presentation

5 Key Takeaways

  1. Strong Pricing Dynamics: Micron is set to benefit from double-digit quarter-over-quarter price increases in DRAM and NAND through Q3 CY24, supported by tight supply-demand conditions.
  2. HBM Market Growth: The HBM segment is expected to contribute significantly to revenue, driven by AI adoption and competition among GPU suppliers. Micron’s HBM products are projected to account for 15-20% of DRAM industry revenue this year.
  3. Technological Advancements: Micron’s continuous innovation in DRAM and NAND technology, particularly with HBM3E, positions the company at the forefront of the semiconductor industry, ensuring a competitive edge.
  4. DRAM Supply Constraints: Aggressive production cuts and die penalties related to DDR5 and HBM have reduced DRAM supply, supporting stable pricing and demand.
  5. Strategic Partnerships: Micron’s secured supply agreements and strategic positioning with major GPU suppliers like NVIDIA and AMD are expected to drive significant revenue growth.

3 Reasons to Invest

Source: SeekingAlpha

  1. AI-Driven HBM Demand: As AI applications expand, the demand for HBM is set to soar, positioning Micron to capture a substantial market share and drive incremental EPS growth.
  2. Secular Growth in DRAM: The DRAM market’s tight supply and increasing demand from smartphones, PCs, and servers present a compelling growth opportunity for Micron.
  3. Technological Leadership: Micron’s advancements in HBM technology and strategic alliances with leading GPU manufacturers ensure a competitive edge in the rapidly evolving semiconductor landscape.

3 Key Risks

  1. Supply Chain Disruptions: Natural disasters like the recent earthquake in Taiwan could disrupt supply chains, impacting production volumes and timelines.
  2. Market Volatility: The memory market is historically volatile, with potential for significant swings in supply-demand balance and pricing.
  3. Technological Competition: Rapid technological advancements and competition from other major players like Samsung could pose challenges to Micron’s market share and pricing power.

Conclusion

Micron Technology is strategically positioned to capitalize on the robust demand in the memory and storage markets, driven by AI and technological advancements. While risks such as supply chain disruptions and market volatility exist, the company’s strong fundamentals and strategic initiatives provide a solid foundation for growth. Investors should consider Micron’s potential for sustained performance and its significant role in the evolving semiconductor industry.

About Micron Technology

Micron Technology, Inc. is a leading provider of innovative memory and storage solutions. The company serves various end markets, including cloud server, client, graphics, networking, smartphone, enterprise, and consumer storage markets. Micron’s product portfolio includes DRAM, NAND, and NOR memory, offering cutting-edge solutions to meet the growing demands of the digital world.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of the company mentioned.

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Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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