Why Micron is up 21% this week

Actions of Micron technology (MU -0.19%) rose 20.9% in the week to Thursday trading, according to data from S&P Global Market Intelligence.

Micron reported earnings on Wednesday, crushing analysts’ estimates while also providing strong guidance. The move comes after the stock has fallen nearly 50% from June highs amid widespread concerns about memory demand. Therefore, the strong pace and guidance caused a nearly 15% increase on Thursday alone.

Micron defies AI skeptics

In the quarter, Micron reported revenue growth of $7.8 billion, up 93% from the previous quarter, with adjusted (non-GAAP) earnings per share of $1.18, up from a adjusted loss per share of ($1.07) in the year-to-date quarter.

Both figures beat analysts’ expectations. But what really encouraged investors was guidance for $8.7 billion in revenue for the current quarter and $1.74 in adjusted earnings per share. Those guidance numbers easily beat analysts’ expectations of $8.32 billion and $1.52, respectively.

AI has played an important role as Micron’s demand for high-bandwidth memory (HBM) continues to grow, along with other types of data center DRAM, such as high-capacity D5 memory and LP5 (low-power) memory . On an even more optimistic note, Micron increased its HBM addressable opportunity to $25 billion in 2025, up from just $4 billion in 2023.

Analysts were somewhat bearish on memory industry earnings, noting that the non-AI sectors of the smartphone and PC markets may have overbought stocks earlier in the year.

Although Micron has acknowledged this slowdown, it appears to be temporary. Moreover, the advent of PCs and smartphones with AI should lead to an increase in memory content for these devices in 2025 — another tailwind.

And Micron is well positioned against competitors

Not only is AI lifting the industry’s fortunes, but management also said Micron was in the best competitive position in its history. Specifically for AI, Micron noted that its 12-height HBM3E product has 50% more capacity at 20% less power than today’s competition.

With a technical lead over rivals and memory demand set for a strong year ahead, it’s no wonder the stock has rallied strongly this week.