Micron Technology (MU) is currently trading around $970, significantly below its 52-week high of $1,255 achieved on June 25, yet it remains an impressive 244% higher year-to-date. This pullback hasn’t altered the company’s compelling narrative, as CEO Sanjay Mehrotra emphasized in a recent conversation with Jim Cramer on Mad Money.
Cramer posed a critical question that investors are keen to understand: when will the memory shortage come to an end? Mehrotra was direct in his response, stating, “The industry needs greenfield capacity. That means new construction of clean rooms, which require considerable time from inception to operational capacity.” He indicated that Micron’s first Idaho fabrication facility is set to produce wafers by mid-2027, with the second facility slated to come online by the end of 2028. Thus, the memory shortage is not expected to resolve itself in the near future.
Cramer previously lauded Micron’s Q3 results, describing them as one of the most significant earnings beats he has witnessed. The figures are indeed compelling, with revenue reaching $41.46 billion, marking a remarkable 346% increase from $9.30 billion year-over-year. The non-GAAP EPS stood at $25.11, surpassing estimates by over $4, while free cash flow reached a record $18.30 billion.
The HBM4 Milestone
Looking ahead, Micron’s guidance for Q4 is striking, projecting revenues of $50 billion, gross margins around 86%, and an EPS of $31.00. Notably, the company’s HBM3E and HBM4 memory products are completely sold out through 2027, with order books extending well into 2028. Hyperscalers have committed $22 billion in advance deposits to secure future supply.
During the earnings call, Mehrotra revealed that Micron has already shipped over $1 billion in HBM4, underscoring not just revenue success but also technological prowess. HBM4 is recognized as the most complex memory product globally, with Micron being the only U.S. entity producing it at scale. When pressed about competition, Mehrotra confidently stated, “We are a clear technology leader in both DRAM and NAND, holding nearly 65,000 patents.”
Cramer also addressed valuation concerns, noting that despite the stock’s impressive run, MU trades at under eight times earnings, suggesting potential for further growth.
The U.S. Manufacturing Push
Micron has pledged $200 billion towards U.S. manufacturing and R&D, targeting the creation of over 90,000 jobs. Additionally, the company is investing $300 million in developing a domestic semiconductor talent pipeline, which includes apprenticeships and partnerships with community colleges and universities.
Mehrotra responded to criticisms regarding U.S. chip manufacturing costs being 50% higher than those in Taiwan, highlighting Micron’s existing facility in Manassas, Virginia, which produces advanced memory for various sectors, including automotive and defense.
On the consumer front, Mehrotra acknowledged that the surging demand for AI data centers is tightening the supply of smartphone and PC memory, which in turn is raising consumer device costs. To maintain a diverse portfolio, Micron retains approximately 40% of its business in consumer markets.
As of July 2, MU is at $970, with promising Q4 guidance suggesting a revenue of $50 billion and EPS of $31.00 on the horizon.
