Micron Stock Jumps After Earnings Beat. Why Investors Expect More Good News.

A bare wafer stacker sorts silicon wafers at Micron Technology headquarters, in Boise, Idaho. (Kyle Green/Bloomberg)

Key Points

About This Summary

• Micron Technology reported fourth-quarter adjusted earnings-per-share of $3.03, exceeding the $2.86 consensus estimate.
• Fourth-quarter revenue reached $11.3 billion, surpassing expectations of $11.2 billion and marking a 46% annual increase.
• The company’s shares rose 1.7% in after-hours trading following the strong earnings report.

Micron Technology reported strong fourth-quarter earnings Tuesday afternoon. Its shares were up 1.7% in after-hours trading.

Adjusted earnings-per-share were $3.03, above Wall Street’s consensus estimate of $2.86, according to Factset, and up from $1.18 last year. Revenue for the quarter reached $11.3 billion, exceeding expectations of $11.2 billion, and up 46% on the year. This marked a quarterly sales record for Micron.

In August, Micron took the unusual step of raising its fourth-quarter guidance from what it had issued two months before, and the results exceeded those raised expectations.

Micron also offered excellent first-quarter guidance for revenue and earnings.

Leading the charge was Micron’s most expensive memory used in artificial-intelligence data centers. Revenue from this segment reached 40% of companywide sales in the quarter, up from 19% last year.

“We have strong momentum entering fiscal 2026, with a robust fiscal Q1 demand outlook led by data center, and the most competitive position in our history,” Micron CEO Sanjay Mehrotra said in his prepared remarks for the earnings call. “Over the coming years, we expect trillions of dollars to be invested in AI, and a significant portion will be spent on memory.”

The AI investment boom has upended investors’ usual expectations for Micron and other memory companies. The business typically has sudden swings in demand, inventories, and pricing that are accompanied by cyclical fluctuations in sales and earnings growth.

Created with Highcharts 9.0.1Typical SwingsMicron’s revenue growth has exhibited a highly cyclical pattern.Source: FactsetNote: Year-over-year sales growth

Created with Highcharts 9.0.1200920172025-75-50-250255075100125150%

But things have changed, and investors are expecting that the demand from the AI investment boom will overwhelm any weakness in other end markets, such as consumer devices. This up-cycle is already two years old, roughly the length of most cycles, but it doesn’t look like it is stopping.

In a Thursday note, TD Cowen analyst Krish Sankar projected that memory prices should increase in the coming quarters; ordinarily, inventories inflate and prices drop this deep into a memory up-cycle.

“We think Micron stock will continue its outperformance in the short term as checks continue to support that momentum,” said Sankar. He raised his price target to $180 from $150.

Just in the past week, 10 analysts have raised their price targets to keep ahead of the share price, up 38% in September to $164.62. The average price target is $166.44.

Write to Adam Levine at adam.levine@barrons.com