Micron Technology, the U.S. memory chip giant, is set to release its financial results for the fourth quarter of fiscal year 2025 (Q4 FY2025) after the U.S. stock market closes on September 23. According to analysts' expectations compiled by Bloomberg, Micron Technology is projected to record Q4 revenue of $11.115 billion, adjusted net income of $3.173 billion, and adjusted earnings per share (EPS) of $2.85.

Recently, market attention has been heavily focused on Micron Technology. The company's stock has surged by over 86% year-to-date, with its share price hitting an all-time high. One of the key drivers behind Micron's stock price rally is the optimistic market outlook for demand of its memory products.

Review of Last Quarter's Performance

Micron Technology's Q3 FY2025 results and its guidance for Q4 both exceeded market expectations. The memory chip manufacturer reported that its Q3 revenue reached a record high, jumping 37% year-over-year to $9.3 billion, which was higher than the average analyst estimate of $8.9 billion. Its adjusted EPS stood at $1.91, also surpassing the analysts' expected $1.60.

The company stated that the Q3 revenue growth was mainly driven by the "all-time high" sales of its DRAM (Dynamic Random Access Memory) chips. Among these, the revenue from High-Bandwidth Memory (HBM) chips increased by nearly 50% quarter-over-quarter. Looking ahead, Micron Technology previously projected that its Q4 revenue would reach approximately $10.7 billion, far exceeding the average analyst expectation of $9.89 billion. It also anticipated an adjusted EPS of around $2.50 for Q4, which was higher than the analysts' average estimate of $2.03.

Forecast for This Quarter's Performance

Micron Raises Q4 Earnings Guidance Across the Board; Improved DRAM Prices Drive Profit Growth

Earlier, due to a significant improvement in the DRAM pricing environment, Micron Technology substantially raised its Q4 FY2025 earnings guidance. The revenue forecast was upwardly revised to a range of $11.1 billion to $11.3 billion, and the gross margin guidance was increased to 44% to 45% from the previous projection of 41% to 43%. Additionally, Micron Technology expects its adjusted EPS for Q4 to be between $2.78 and $2.92.

The company specifically highlighted the improvement in DRAM pricing conditions, a change that typically reflects a better balance between supply and demand in the memory market. The improved DRAM pricing has created a more favorable pricing environment for the entire storage chip industry, potentially indicating that the historically cyclical pricing of storage chips is entering a positive cycle.

Micron's management attributed the upward revision of earnings to the improved DRAM pricing and strong execution capabilities. This demonstrates not only favorable industry conditions but also the company's unique operational advantages. Improved DRAM pricing usually signifies a healthier supply-demand balance in the memory market, creating a more beneficial pricing environment for industry participants.

Given the historical cyclical nature of storage chip pricing, the current improvement may signal the continuation of a more positive pricing cycle. This better supply-demand balance will not only benefit Micron but also potentially bring a more stable profit environment to the entire memory industry.

DRAM Business Continues to Recover, Driven by Both Price and Demand

The DRAM business has long been one of Micron Technology's core business segments. In recent years, the storage chip market once went through a "cold winter," where weak demand led to a sharp drop in the prices of DRAM and other storage chips. However, the current DRAM market is showing a clear recovery trend. Micron Technology's management attributed the upward adjustment of its earnings to the improved DRAM pricing and the company's strong execution.

According to the latest survey by TrendForce, the DDR4 (Double Data Rate 4) market is expected to remain in short supply during the second half of 2025, with prices rising strongly. The robust growth in server orders is squeezing the supply for the PC and consumer markets, forcing PC original equipment manufacturers (OEMs) to accelerate the adoption of DDR5 (Double Data Rate 5). Meanwhile, consumer electronics manufacturers are grappling with high prices and material shortages. The tight supply-demand situation in the DRAM market has also pushed up the contract prices of mobile DRAM. In Q3 2025, LPDDR4X (Low Power Double Data Rate 4X) recorded the largest single-quarter price increase in nearly a decade. As a key player in the DRAM market, Micron Technology will significantly benefit from this market environment. Its efforts in optimizing the DRAM product portfolio and improving costs have helped push the gross margin back to 37.7% in this quarter. In Q4, with further increases in DRAM prices and sustained strong demand, Micron Technology's DRAM business is expected to continue contributing substantial profits to the company.

HBM Business Progresses Smoothly, with Mass Production Imminent

In Micron's current performance, the mass production of HBM (High-Bandwidth Memory) is of crucial importance. Since Micron's HBM production capacity has been largely booked, the market is now mainly focused on the progress of its capacity ramp-up and release. Currently, Micron's HBM business is advancing smoothly. Among its products, the HBM3E 12-high has been adopted in NVIDIA's GB300, and it is expected to enter a phase of mixed supply of 8Hi and 12Hi in the next quarter. By then, the HBM3E 12Hi (matched with GB300) is projected to be the main product in terms of shipment volume, while the HBM3E 8Hi (matched with GB200) will serve as a supplementary product.

Combining the company's own expectations and market forecasts, there is a view that Micron's HBM revenue is expected to reach $7 billion to $8 billion in 2025 (calendar year). Sumit Sadana, Micron's Chief Commercial Officer, stated at the 2025 Keybanc Technology Conference held on U.S. local time that customized HBM memory will be officially launched in the HBM4E era following HBM4. This shift means that HBM memory will no longer be merely an extension of the off-chip cache for AI xPUs (accelerated processing units) but also an integral part of the xPU's logical functions. The sound development momentum of the HBM business will become a major highlight in Micron Technology's Q4 performance and lay a more solid foundation for the company in the field of AI storage.

NAND Business Adjusts Strategy to Focus on High-Potential Markets

In response to business changes, Micron stated that, given the continued weak financial performance of mobile NAND products in the market and their slower growth compared to other NAND opportunities, the company will cease the development of future mobile NAND products globally, including the termination of the development of UFS5 (5th Generation Universal Flash Storage). Micron emphasized that this decision will only affect the development of global mobile NAND products; the company will continue to develop and support other NAND solutions, such as SSDs (Solid-State Drives) and NAND solutions for the automotive and other end markets.

In the data center sector, Micron Technology's NAND revenue previously hit a record high, driven by data center SSD sales, with quarterly revenue exceeding $1 billion for the first time. In Q4, as the demand for storage in the data center market continues to grow, Micron Technology will focus on businesses such as data center SSDs and is expected to achieve stable growth in its NAND business. Furthermore, in other end markets like the automotive industry, NAND solutions hold significant growth potential, and Micron Technology's continuous investment in these areas is expected to yield positive results.

Views from Wall Street Investment Banks

Citigroup ($C) anticipates that Micron will provide earnings guidance that exceeds expectations when it releases its Q4 FY2025 financial results later this month. Citigroup reaffirmed its "Buy" rating on Micron Technology and raised its target price from $140 to $175.

Christopher Danely, an analyst at Citigroup, stated in a report released on Thursday: "We expect Micron to report results in line with expectations and provide guidance well above the market consensus, driven by higher sales volume and prices of DRAM and NAND products. We believe the continued recovery of the storage market is fueled by limited production capacity and stronger-than-expected demand, particularly demand from the data center end market, which accounts for 55% of Micron's revenue."

Citigroup raised its forecast for Micron Technology's full-year FY2026 revenue from $54.5 billion to $56 billion, and its adjusted EPS forecast from $14.62 to $15.02, which is 26% higher than the market average expectation. Citigroup also projects that Micron's Q1 FY2026 revenue will reach $13 billion, with an adjusted EPS of $3.23.

Danely added: "We believe the recovery momentum of DRAM remains strong. Our survey results show that demand in the artificial intelligence (AI) field has grown significantly, as capital expenditure on C25 Chip Scale Packaging (CSP) increased by $18 billion during the earnings season. We believe this will bring potential positive impacts to Micron."

This content is generated based on Tiger AI and Bloomberg data, for reference only.