On Thursday, JPMorgan revised its price target for Micron Technology (NASDAQ:MU), reducing it from $180 to $145, while maintaining an Overweight rating on the stock.
The adjustment comes after Micron reported November quarter results, with revenue in line with expectations and earnings per share slightly above forecast. The strong performance was attributed to robust DRAM bit shipments and a significant improvement in DRAM prices, which offset weaker NAND bit shipments and prices.
Micron’s data center revenue mix, including High Bandwidth Memory (HBM), server DRAM and enterprise SSDs, saw 40% quarter-over-quarter growth and accounted for more than half of total revenue. This growth is seen as a reflection of Micron’s market share gains in HBM and enterprise SSDs, along with strong demand for AI applications.
However, the company’s revenue forecast for the February quarter was set at 9% lower quarter-over-quarter, below expectations due to expected challenges in consumer markets such as PCs and smartphones, which are expected to impact shipments NAND and Average Selling Prices (ASP).
Despite the subdued revenue outlook for the February quarter, Micron’s gross margin is expected to decline only 100 basis points quarter-over-quarter, suggesting DRAM prices will continue to rise thanks to a strong data center product mix.
The company also saw a significant increase in HBM revenue, with expectations for continued momentum through fiscal 2025. Micron management increased its forecast for the 2025 HBM market by 25% and expects substantial growth in HBM Total Addressable Market (TAM) by 2028 and beyond.
Micron reaffirmed its goal to grow HBM revenues from several hundred million dollars in fiscal 2024 to several billion in fiscal 2025 by expanding its customer base and gaining share on key platforms, including those of NVIDIA. The company plans to spend $14 billion in capital expenditures in fiscal 2025, focusing on investments in new DRAM facilities and expanding HBM back-end capacity, while moderating capital expenditures for NAND.
“Despite the near-term weakness, we continue to believe the downcycle in memory will be short-lived and expect market conditions to improve in the second half of 2025 as supply of leading-edge DRAM remains tight and strong AI server demand continues to drive growth in HBM/DDR5,” JPMorgan analysts said.
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