Micron’s Q4 earnings surpass Wall Street’s expectations in latest test of AI trade-awdailynews

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2025-09-24

Micron’s Q4 earnings surpass Wall Street’s expectations in latest test of AI trade

Micron (MU) reported fiscal fourth quarter earnings results after the bell Tuesday that surpassed Wall Street’s expectations — a positive signal for the AI trade and for investors hoping the chipmaker’s stock can sustain its recent upswing.

Micron’s fiscal fourth quarter revenue of $11.3 billion was ahead of the $11.15 billion expected by analysts polled by Bloomberg. The Idaho-based memory chipmaker — whose semiconductors are used alongside Nvidia’s chips in AI data centers — saw adjusted earnings per share of $3.03 for the three months ending Aug. 28, more than the $2.84 projected.

Micron’s performance also surpassed its boosted outlook for the quarter provided in August.

The beat was fueled by the AI data center boom, company executives said, with data centers representing 40% of the chipmaker’s total revenue in the fourth quarter.

The stock briefly climbed 2% following the results in after-hours trading to hit $171.50, above its all-time intraday high last week, but later pared gains.

Micron’s guidance for its 2026 fiscal first quarter was also above expectations. The company guided for first quarter revenue between $12.2 billion and $12.8 billion, more than the $11.9 billion expected by analysts tracked by Bloomberg. The chipmaker said it expects first quarter adjusted earnings per share to fall between $3.60 and $3.90, ahead of the $3.05 projected.

“Over the coming years, we expect trillions of dollars to be invested in AI, and a significant portion will be spent on memory,” CEO Sanjay Mehrotra said in call with analysts following the company’s results. “As the only US-based manufacturer of memory, Micron is uniquely positioned to benefit from the AI opportunity ahead.”

Micron has been one of a number of tech giants that have deepened its investments in the US amid pressure from the Trump administration. The firm in June said it will invest $200 billion in its US memory chipmaking facilities.

The company is one of three leading memory chipmakers. Its rivals are Korea-based SK Hynix (000660.KS) and Samsung Electronics (005930.KS), but the latter has fallen behind in the AI race.

Micron’s DRAM (dynamic random access memory) chips are used for short-term memory storage in everything from personal computers to AI data centers and historically have accounted for the majority of the company’s revenue.

One kind of Micron’s DRAM tech — its HBM (high bandwidth memory) chips, which include multiple vertically stacked DRAM semiconductors — has been crucial to the AI buildout and are used alongside GPUs (graphics processing units) in Nvidia’s (NVDA) AI systems for data centers.

The combined wave of AI demand from Nvidia — which accounts for 16% of Micron’s revenue on an annualized basis, per Bloomberg data — and Samsung’s laggard performance in the space have propelled Micron to new prominence.

Micron shares have jumped roughly 97% this year, much higher than the 18% average gain across the so-called Magnificent Seven Big Tech stocks. But concerns have recently intensified that AI-fueled tech stocks are in bubble, and analysts have debated whether Micron’s stock rally has more room to run.

“We believe that Micron is one of the largest beneficiaries in the semiconductor industry of the secular growth driven by AI,” Micron’s chief business officer Sumit Sadana told Yahoo Finance.

The DRAM market has seen a massive upswing amid a surge of investment in AI infrastructure, growing 83% to $95 billion in 2024, with Micron holding a 35% market share, according to Deutsche Bank analyst Melissa Weathers.

And Micron’s DRAM segment drove the chipmaker’s revenue beat Tuesday, with revenue from those chips jumping nearly 70% from the previous year to hit $8.98 billion in the fourth quarter, above the $8.55 billion projected by analysts.

Meanwhile, revenue from Micron’s NAND chips fell below expectations, sinking roughly 5% from the year-ago period to $2.25 billion, less than the $2.35 billion forecast by analysts. Micron’s NAND memory chips store data long-term in data centers and consumer devices such as smartphones.

But Sadana said he expects NAND demand to pick up in the company’s 2026 fiscal year: “AI has been a huge driver of DRAM, but AI also uses NAND in a pretty significant way.”

“So we are starting to see [an] increased level of purchases from data center customers of NAND. as well,” he added, “And that is starting to improve the fundamentals of the NAND industry also.”