Artificial intelligence has transformed the tech market. Memory manufacturers that don’t make AI software or GPUs have reaped the benefits of the increased demand arising from this new trend.
Micron is the third-largest supplier of memory chips, including DRAM, NAND, and high-bandwidth memory (HBM). HBM chips are essential to the AI market. GPUs that power AI data centers are becoming progressively powerful but are being bottlenecked by memory bandwidth, which has created a surge in demand for HBM.
Another thing needed for data centers is enterprise-grade SSDs with huge capacities built with NAND flash memory chips — another boon for Micron.
Micron Q4 revenue grows 46% to $11.32 billion year over year.
Image source: Chih/Bloomberg via Getty Images
Micron Q4 revenue grows 46% to $11.32 billion year over year
On September 23, Micron (MU) reported its results for Q4 of fiscal 2025.
“In fiscal 2025, we achieved all-time highs across our data center business and are entering fiscal 2026 with strong momentum and our most competitive portfolio to date,” said Micron CEO Sanjay Mehrotra.
Here are Micron’s earnings highlights:
- Revenue of $11.32 billion compared to $7.75 billion in Q4 2024
- Net income of $3.20 billion compared to $887 million in Q4 2024
- Diluted earnings per share of $2.83 compared to $0.79 in Q4 2024
- Operating cash flow of $5.73 billion compared to $3.41 billion in Q4 2024
- Gross margin of 44.7% compared to 35.3% in Q4 2024
Related: Quantum Computing’s unexpected move sends shares reeling
The company provided an outlook for Q1 of fiscal year 2026:
- Revenue $12.50 billion ± $300 million
- Gross margin 50.5% ± 1.0% (51.5% ± 1.0% for non-GAAP)
- Operating expenses $1.49 billion ± $20 million
- Diluted earnings per share $3.56 ± $0.15
During the earnings call, Chief Business Officer Sumit Sadana commented about increasing demand for high capacity enterprise SSDs:
We do think there will be meaningful uptake of these high-capacity drives, and they will drive the average capacities higher. There is expected to be a shortage of hard drive storage for these hyperscalers. More meaningful usage of NAND even beyond previous plans should drive a positive outcome here as well as an added tailwind.
Bank of America analysts raise Micron price target
Bank of America analyst Vivek Arya and his team provided an opinion on the MU stock following the earnings release.
Analysts noted that Micron is supported by the surging AI demand and the memory industry’s supply discipline, which has increased pricing in traditional DDR4 and new DDR5 markets. The team said that another positive for Micron is a resurgence in traditional server CPU sales driven by agentic AI and in high-capacity solid-state drives used in AI inference clusters.
More Tech Stocks:
- Analysts revamp Nvidia stock outlook on its investment in Intel
- Is Oklo a high-risk, high-reward investment?
- Nvidia OpenAI blockbuster deal raises major questions
- Quantum computing companies looking to finance the future
Analysts noted downside risk factors for Micron:
- Larger-than-expected memory average selling price decline
- Greater competition from China newcomers
- Share loss to large competitors
- Softening of demand across major end markets
Arya reiterated a neutral rating and raised the target price from $140 to $180, based on a 2.6 multiple of his estimate for Micron’s price-to-book ratio for calendar year 2026. This is in the upper range of Micron’s long-term range of 0.8 to 3.1.
While Arya raised the price target, the market didn’t react positively to the earnings report, and at last check, MU shares were trading 4% lower near $159.
Key takeaways:
- Q4 revenue increased 46% to $11.32 billion year over year.
- Micron provided strong gross margin guidance for Q1 2026.
- Bank of America raised the target price for MU to $180.
- Analysts reiterated a neutral rating.