Micron posts blowout results in record quarter, stock soars 13%
|While AI stocks have sputtered in recent weeks, Micron Technology (NASDAQ:MU) keeps right on generating strong returns.
Micron, a leading manufacturer of high bandwidth memory and storage chips for AI and other applications, saw its stock price soar some 13% Thursday after it released blowout fiscal first quarter earnings.
The stock is now up a ridiculous 202% year-to-date, and it has not been hit by the valuation wall in recent weeks that have sent most AI stocks lower.
That’s because for all its success, it is still reasonably valued, some might even call it undervalued. The stock has a P/E ratio of 21 and a forward P/E of just 11. Further, its PEG ratio is a minuscule 0.19, indicating it is undervalued relative to its long-term earnings outlook.
That means it should have plenty of room to run, even after spiking some 13% Thursday and 202% so far in 2025.
Blowout earnings
Micron generated record revenue in its Q1 ended November 27, pulling in $13.64 billion, which is up 20% from the previous quarter and versus $11.32 billion for the prior quarter and 56% year-over-year. That blew away estimates of $12.8 billion.
The chip maker posted net income of $5.2 billion, or $4.60 per share, up 62% from the previous quarter and roughly 175% year-over-year. That crushed estimates of $3.94 per share.
The gross margin was 56%, up from 44.7% the previous quarter and 38.4% in the first fiscal quarter of the previous year.
The cloud memory business is essentially is the segment that makes high-bandwidth AI memory chips for AI data centers and hyperscalers like Microsoft, Amazon, and Google. It also makes the memory chips for chip makers like Nvidia, Intel and AMD and manufacturers like Apple, Dell, and Samsung. So, Micron has positioned itself as a critical partner in the center of the AI boom.
99% growth in cloud memory unit
That is clearly apparent when you look at the massive growth of the cloud memory unit. The firm generated about $5.3 billion in revenue in this business last quarter, up 99% from the same quarter a year ago.
“In fiscal Q1, Micron delivered record revenue and significant margin expansion at the company level and also in each of our business units,” Sanjay Mehrotra, chairman, president and CEO of Micron, said. “Our Q2 outlook reflects substantial records across revenue, gross margin, EPS and free cash flow, and we anticipate our business performance to continue strengthening through fiscal 2026. Micron’s technology leadership, differentiated product portfolio, and strong operational execution position us as an essential AI enabler, and we are investing to support our customers’ growing need for memory and storage.”
For the second fiscal quarter, Micron guided for $18.7 billion in revenue, which would be up 37% from Q1. The outlook for the gross margin is 66%, up from 56% this past quarter, while the earnings are targeted at $8.19 per share, which would be up significantly from $4.60 per share this past quarter.
We have long called Micron one of the best stocks out there, for not only its earnings power but also its low to reasonable valuation – and this earnings report has not changed that view.
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