Micron Earnings Report to Test AI Storage Bull Market, Market Expects Market Cap Swing of Over $150 Billion
BlockBeats News, June 24th. Micron Technology (MU.O) is set to announce its fiscal third-quarter earnings after the U.S. stock market closes on Wednesday. Prior to the earnings report, Micron's stock price has surged more than 7-fold in the past year, pushing its market capitalization above $1 trillion. The market expects Micron's stock to experience a volatility of around 14% post-earnings, corresponding to a market cap change of over $150 billion. The recent spike is mainly driven by AI demand, leading to a severe shortage of storage chips, which has benefited stocks of Micron, Samsung, SK Hynix, and other storage companies. For the third quarter ending in May, the market consensus is that Micron's revenue will grow between 279% to $35.3 billion, and the adjusted earnings per share will increase from $1.91 to $20.28. Due to the company's rapid growth, investors' focus may not solely be on the past quarter's performance but also on the fourth-quarter guidance.
Analysts currently project Micron's fourth-quarter revenue to be $42.5 billion, with an adjusted earnings per share of $24.80. If the company provides guidance significantly above expectations again, the stock price could continue to rise; however, at the current valuation level, any key metric falling short of expectations could trigger a substantial pullback. Profit margin is also a key variable. Micron achieved a gross margin of 74.4% in the second quarter, higher than 36.8% in the same period last year and 56% in the first quarter. The company previously forecasted a gross margin of 81% for the third quarter. If the gross margin continues to increase in the fourth quarter, it would indicate that the storage pricing environment is further strengthening.
Furthermore, the market will focus on whether the management will sustain the view that "data center and AI-related storage supply constraints will persist beyond 2026." Micron previously mentioned that for some key customers, the company can only meet 50% to two-thirds of their demand in the midterm.
