Although Micron Know-how (NASDAQ: MU) inventory has witnessed massive swings up to now in 2025, shares of the reminiscence specialist are nonetheless up 15% this yr, as of this writing, and it appears just like the inventory is ready to fly greater following the discharge of its fiscal 2025 second-quarter outcomes.
Micron launched its newest quarterly report (for the three months ended Feb. 27) on March 20. The corporate recorded an enormous enhance in its prime and backside traces final quarter and crushed Wall Avenue’s expectations handsomely. What’s extra, Micron’s steering for the present quarter additionally exceeded consensus estimates, which was not shocking, as the corporate is witnessing remarkably strong demand for its high-bandwidth reminiscence (HBM) that is deployed in artificial intelligence (AI) knowledge facilities.
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Let’s take a better take a look at Micron’s newest quarterly report and see why it could be a good suggestion to purchase this semiconductor inventory immediately.
AI-fueled demand has helped Micron Know-how step on the fuel
Micron’s fiscal Q2 income shot up a formidable 38% yr over yr, whereas its non-GAAP (typically accepted accounting rules) earnings elevated at a a lot sooner tempo and jumped 3.7x from the year-ago interval to $1.56 per share. Micron’s excellent development was powered by file income from dynamic random entry reminiscence (DRAM) chips utilized in knowledge facilities.
Gross sales of Micron’s HBM chips which are utilized by the likes of Nvidia in its knowledge middle AI graphics processing items (GPUs) shot up 50% on a sequential foundation, producing greater than $1 billion in quarterly income for the corporate. HBM chips alone are transferring the needle considerably for Micron proper now, contemplating that the corporate’s whole quarterly income landed at simply over $8 billion.
Micron’s HBM enterprise is more likely to stay a key development driver sooner or later as properly, as AI chipmakers have been packing in larger reminiscence into their knowledge middle GPUs. As an example, Superior Micro Units is packing 288 gigabytes (GB) of HBM into its MI325X AI GPUs, which the corporate began transport final quarter. That is greater than the 192 GB of HBM that the corporate’s earlier MI300X chip was sporting.
Equally, Nvidia has additionally bumped up the HBM capability in its newest Blackwell processors to 192 GB from 141 GB within the previous-generation Hopper H200 processor.
On condition that these chips are in strong demand, it’s simple to see why Micron has bought out its whole HBM capability for 2025. Even higher, Micron expects sturdy HBM demand to proceed in 2026.
In consequence, the corporate is ramping up the manufacturing capability of HBM chips in its current services and not too long ago broke floor on a brand new HBM facility in Singapore. It could have so as to add further HBM manufacturing traces sooner or later, as Micron began “quantity shipments to our third giant HBM3E buyer and anticipate further clients over time.”
Micron has elevated its whole addressable market (TAM) estimate for HBM in 2025 to $35 billion from its December 2024 estimate of $30 billion. Bloomberg Intelligence estimates that the worldwide HBM market may generate a whopping $130 billion in annual income in 2033. So there’s a good likelihood Micron’s HBM enterprise will stay a crucial development driver for the corporate in the long term.
The steering and valuation make the inventory price shopping for immediately
These catalysts inform us why Micron’s outlook for the present quarter is strong. The corporate is anticipating its income to leap by 29% within the present quarter from the year-ago interval, whereas its earnings forecast of $1.57 per share would translate into an enormous leap of 153% from final yr.
Nevertheless, the opportunity of Micron exceeding these estimates can’t be dominated out if it manages to deliver extra capability on-line to fulfill the wholesome demand for HBM. Moreover, the speedy development in Micron’s earnings makes this AI stock a no brainer proper now, contemplating its engaging valuation.
Micron is buying and selling at 29 occasions trailing earnings, whereas its forward earnings multiple of 14 factors towards a giant bottom-line leap. The tech-laden Nasdaq-100 index, for comparability, has trailing earnings a number of of twenty-two and ahead earnings a number of of 13.
All this makes Micron Know-how a prime inventory to purchase proper now, because it has the potential to leap greater due to the eye-popping development that it’s delivering and its strong prospects within the HBM market.
Must you make investments $1,000 in Micron Know-how proper now?
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Harsh Chauhan has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Superior Micro Units and Nvidia. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
