Will Micron's AI-Fueled DRAM surge offset NAND challenges in Q3?

Key takeaways

• Micron's DRAM revenues are expected to hit $7B in Q3, up 49.2% year over year on AI-driven demand.

• MU benefits from strong ties with NVIDIA, AMD and Marvell in the booming AI infrastructure market.

• Weak NAND pricing and oversupply may limit Micron's overall earnings growth despite DRAM strength.

Micron Technology, Inc. (MU - Free Report) will report its third-quarter fiscal 2025 results on June 25, after market close, and expectations are running high. The company has been gaining momentum due to the surge in artificial intelligence (AI) investments and its strong ties with leading tech firms. While Micron’s DRAM business is thriving on this AI boom, its NAND business remains under pressure and could weigh on overall earnings growth.

AI-Led Demand Likely to Drive Micron’s DRAM sales higher

Micron has found itself in a sweet spot amid the AI revolution, which is driving the skyrocketing demand for memory and storage solutions. AI systems — particularly large language models (LLMs) and generative AI applications — require massive data processing and storage capabilities, creating a growing need for high-performance DRAM.

Micron’s DRAM segment is expected to be the star of its third-quarter report. The Zacks Consensus Estimate for DRAM revenues stands at $7 billion, marking stellar 49.2% year-over-year growth. This not only underscores Micron’s market strength but also highlights the improved pricing dynamics in the DRAM industry. After struggling with oversupply issues in previous years, the memory market is showing signs of stabilization, which has strengthened pricing power and boosted Micron’s margins.

Moreover, Micron’s mass production of its HBM3E (high-bandwidth memory) for NVIDIA Corporation’s (NVDA - Free Report) next-generation AI chips, including the H200 GPUs, has positioned it as a vital supplier for AI powerhouses. With HBM memory in short supply and NVIDIA driving relentless AI demand, Micron’s pricing leverage for these premium products is likely to be a major DRAM revenue booster in the third quarter.

Micron Technology, Inc. price and EPS surprise

Key tech partnerships strengthen Micron’s position

Micron’s partnerships with major tech players such as NVIDIA, Advanced Micro Devices, Inc. (AMD - Free Report) and Marvell Technology, Inc. (MRVL - Free Report) are giving it a big edge in the AI race. These partnerships help Micron secure steady revenue streams and cement its reputation as a trusted supplier in the high-performance computing space.

Micron’s ties with NVIDIA are especially valuable. NVIDIA has confirmed Micron as a key HBM supplier for its upcoming GeForce RTX 50 Blackwell GPUs, linking Micron to the fast-growing AI hardware ecosystem. Advanced Micro Devices is another major partner. Micron’s HBM3E chips are being used in Advanced Micro Devices’ upcoming AI-enabled Instinct MI350 GPUs, which should boost sales as AI infrastructure spending rises. Micron is likely to have capitalized on this massive AI infrastructure buildout in the to-be-reported quarter.

Micron is also working with Marvell on custom memory solutions. Marvell is building advanced AI silicon, and Micron’s memory chips are part of its high-performance systems. These partnerships show that Micron is becoming a go-to supplier for companies building AI data centers and related technology.

Weak NAND market limits Micron’s earnings upside

While Micron’s DRAM business is booming, the company’s NAND segment remains a weak spot. The NAND market continues to struggle with oversupply and weak pricing, which are hurting profitability. Although there have been slight pricing improvements in the first half of 2025, the recovery has been slower than management had hoped.

Management previously admitted that NAND prices aren’t rebounding as fast as DRAM prices. Even with some small price gains quarter over quarter, it’s unlikely that NAND margins will show meaningful improvement. This means that the NAND side of the business could partially offset the strong gains from DRAM and limit this Zacks Rank #3 (Hold) company’s overall earnings growth in the third quarter.

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