Micron Technology Inc (NASDAQ: $MU) is a leading manufacturer of computer memory and data storage solutions. Headquartered in Boise, Idaho, the company produces DRAM, NAND flash memory, and other semiconductor components vital for computers, servers, smartphones, and various electronic devices. With a global presence and cutting-edge technology, it is a key player in the evolving digital landscape.
On March 20, 2024, Micron Technology delivered outstanding fiscal second quarter fiscal 2024 results, fueled by the surging demand for AI applications. The company’s robust performance has propelled it to profitability, exceeding expectations and positioning it as a frontrunner in the rapidly evolving AI landscape.
Q2 Financial Highlights
The Boise, Idaho-based semiconductor giant reported a staggering 58% Y/Y increase in revenue, reaching $5.82 billion for the quarter ended February 29, 2024. This remarkable surge is attributed to the heightened demand for Micron’s cutting-edge products, particularly in the AI and data center sectors.
Gross margin soared to an impressive 20%, primarily fueled by higher pricing and bolstered by the sale of previously written-down inventories worth $382 million. The company reported GAAP net income of $793 million and non-GAAP net income of $476 million.
Micron’s diluted EPS for the second quarter was $0.42, a significant improvement compared to a loss per share of $0.95 in the preceding quarter and a loss per share of $1.91 the previous year. The favorable income tax effect contributed approximately $0.34 per share to the fiscal Q2 EPS.
Operating cash flow reached $1.22 billion, representing 21% of revenue, while capital expenditures amounted to $1.25B, for an adjusted free cash flow of ($29) million. The company’s operating expenses in fiscal Q2 amounted to $959 million, a decrease of $33 million Q/Q, aligning with the company’s guidance range.
Micron closed Q2 of 2024 with a strong cash position of $9.72 billion in cash, marketable investments, and restricted cash, maintaining liquidity of $12.2 billion. During the quarter, the company successfully refinanced approximately $1 billion of existing debt, extending debt maturities and reducing near-term borrowing costs. As of the end of the quarter, Micron’s total debt stood at $13.7 billion.
Business Unit Performance
Micron’s performance was driven by robust demand across its business units. The Compute and Networking business unit revenue soared to $2.2 billion, with robust growth in the cloud segment and data center. The Mobile business unit revenue increased 24% sequentially to $1.6 billion, as improved pricing offset an expected decline in volume.
The Embedded business unit revenue rose 7% sequentially to $1.1 billion, driven by solid demand for leading-edge products in the industrial market. The Storage business unit revenue surged 39%, with strong double-digit growth across all end markets. Notably, data center SSD revenue more than doubled from a year ago, fueled by share gains for Micron’s products.
Micron’s Q324 Guidance
For the third quarter of fiscal 2024, Micron is projecting revenue of $6.60 billion, with a gross margin of 25.5%. Operating expenses are expected to be $1.11 billion, and diluted earnings per share are forecasted at $0.17.
The company’s tax forecast for fiscal year 2024 has been revised upwards to approximately $400 million, and the annual effective tax rate for fiscal 2025 is expected to be in the mid-teens percentage range.
Mark Murphy, Executive Vice President and CFO at Micron Technology, stated, “We expect positive free cash flow for the second half of fiscal 2024 and project record revenue in fiscal 2025.”
Micron’s Dividend Declaration and Expansion Update
Micron’s Board approved a dividend of $0.115 per share, payable on April 16, 2024, to shareholders of record as of the close of business on April 1, 2024. This move reflects the company’s confidence in its financial position and prospects.
Micron’s CEO, Sanjay Mehrotra, confirmed that announced projects in China, India, and Japan are proceeding as planned. Regarding potential U.S. expansion, Mehrotra highlighted the importance of receiving sufficient CHIPS grants, investment tax credits, and local incentives to address the cost difference compared to overseas expansion.
Micron Technology (MU) Stock Performance
On Thursday, March 21, 2024, Micron witnessed a remarkable upswing in its stock price following its Q2 financial results announcement. The company’s shares soared to $110.51 as of 09:50 AM EDT, a 14.82% increase from the previous day’s closing Price of $96.25.
Micron’s market capitalization is $121.616 billion, with a 52-week change of 56.91%, surpassing the S&P500’s 52-week change of 32.31%. Its 52-week high and low are $113.50 and $56.01, respectively. The 50-day moving average is $88.25, with a trailing P/E ratio of 10.05.
MU Stock Forecast
In the past three months, 27 financial analysts on Wall Street have projected Micron’s 12-month price targets. The average estimate is $104.76, ranging from a high of $150.00 to a low of $74.75. The average price target represents a decrease of 5.51% from the last price of $110.87. Among the 27 analysts, 25 recommended buying the MU stock.
Should You Invest in Micron Technology (MU)?
Based on the exceptional fiscal Q2-24 results, driven by soaring demand for AI applications and robust performance across all business units, Micron’s future outlook is promising.
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