Micron (MU) Soars 5% on Strong Q2 Earnings, AI-Driven HBM Growth, and Upbeat Guidance"

Micron Technology (NASDAQ: MU) delivered a strong fiscal second-quarter report, beating revenue and EPS expectations while showing continued momentum in AI-driven demand. The stock rose 5% in after-hours trading, breaking above its 200-day moving average at $104, which will serve as a critical technical level moving forward. While gross margins came in slightly below estimates, the company’s guidance for Q3 revenue and bit shipment growth was better than expected, helping lift sentiment. With HBM revenue surpassing $1 billion for the quarter and data center revenue tripling, micron continues to solidify its leadership in high-value memory markets.

Headline Numbers

Micron reported adjusted revenue of $8.05 billion, up 38% year-over-year and above Wall Street’s $7.91 billion estimate. Adjusted EPS came in at $1.56, comfortably topping the $1.42 consensus and significantly higher than $0.42 a year ago. However, gross margin at 37.9% fell short of the 38.4% estimate, likely due to pricing pressure in NAND and seasonal DRAM softness. Cash flow from operations jumped to $3.94 billion, compared to $1.22 billion last year, reflecting operational improvements and better pricing trends in DRAM.

DRAM & NAND Performance

Micron’s DRAM revenue totaled $6.1 billion, accounting for 76% of total revenue. While up 47% year-over-year, DRAM revenue declined 4% sequentially, with bit shipments down in the high-single-digit percentage range, reflecting seasonal trends. However, average selling prices (ASPs) increased in the mid-single-digit percentage range, mitigating some of the softness. NAND revenue came in at $1.9 billion (23% of total revenue), up 18% year-over-year but down 17% sequentially. ASPs declined in the high-teens percentage range, though bit shipments saw a modest increase. The NAND pricing environment remains challenging, but Micron expects bit shipment growth in Q3 as market conditions improve.

HBM & AI-driven Demand

Micron’s HBM business exceeded expectations, with revenue growing more than 50% sequentially, surpassing $1 billion in quarterly revenue. The company is sold out of its HBM output for 2025 and has raised its 2025 total addressable market (TAM) estimate to over $35 billion, reflecting strong AI demand. Micron’s HBM3E 12H product, which has a 20% power advantage over competing 8H products, is ramping fast, and its HBM3E 8H has been designed into Nvidia’s GB200, with HBM3E 12H included in the GB300 system. Looking ahead, Micron remains on track to ramp HBM4 in 2026, targeting a 60%+ bandwidth increase over HBM3E.

End Market Commentary

Data centers continue to drive strong demand, with data center revenue tripling year-over-year. Micron hit a record-high market share in data center SSDs, though short-term inventory corrections impacted NAND shipments. The PC market is expected to benefit from AI-driven refresh cycles in the second half of 2025, with the Windows 10 end-of-life in October serving as a catalyst. AI PCs require higher DRAM content, boosting Micron’s 1-gamma D5 DRAM and G9 NAND SSD adoption. In mobile, growth remains muted, but AI-capable smartphones are increasing DRAM requirements from 8GB to 12GB or more. Micron’s LP5X DRAM and UFS 4.0 NAND were featured in the Samsung Galaxy S25. In automotive and industrial, memory content per vehicle is rising, with AI-driven infotainment and driver assistance systems expanding. Micron has launched the industry’s first automotive-qualified LP5X DRAM, and robo-taxis are now using over 200GB of DRAM per vehicle.

Supply & Demand Outlook

Micron expects DRAM demand growth in the mid-to-high teens for 2025 and NAND bit demand in the low double digits. The company continues to underutilize NAND fabs, keeping wafer output down mid-teens percentage from prior levels, with a planned structural 10%+ reduction in NAND wafer capacity by year-end. Meanwhile, tightness at the leading edge in DRAM, particularly with HBM, will continue. Management expects inventory days to decline in Q3 as bit shipments increase.

Capex & Guidance

Micron maintained its FY25 capex guidance at approximately $14 billion, focusing on HBM, DRAM, and packaging capacity expansion. The company expects Q3 revenue of $8.6 billion to $9 billion, above the $8.55 billion consensus, with EPS guidance of $1.57 plus or minus $0.10. Gross margin guidance of 36.5% plus or minus 1.0% suggests some pricing pressure in NAND but an overall positive demand backdrop. Notably, potential new tariffs were not included in guidance, creating a wildcard for future profitability.

Stock Market Reaction & Analyst Sentiment

Micron’s stock surged 5% after-hours, clearing its 200-day moving average at $104, a key technical level to hold. Analysts will likely revise estimates upward, given the strong guidance and AI-driven growth tailwinds. While NAND pricing remains a headwind, HBM strength and improving DRAM pricing support a bullish long-term outlook. With AI demand fueling next-generation memory growth, Micron remains well-positioned for continued share gains in high-performance memory markets.