Micron improved its outlook due to demand for AI memory. Will the stock rally continue?

Micron Technology, the largest US memory chip maker, has given an optimistic outlook for the current quarter. The company expects further growth in revenue and profit thanks to steady demand for memory chips for AI. Micron shares have almost doubled in price this year, and most analysts still recommend buying them.

Revenue of memory chip maker Micron in the current quarter will be about $12.5 billion (plus or minus $300 million), the company said. That's above analysts ' consensus of $11.9 billion, Bloomberg reported. Micron also expects adjusted earnings per share to be $3.75, compared with Wall Street's forecast of $3.05.

This forecast confirms that Micron has become one of the main beneficiaries of the investment boom in the AI-sphere, Bloomberg believes. Its product - high-bandwidth memory (HBM) - plays a key role in the production of chips and systems involved in training neural networks, the agency recalls.

Following the report, Micron shares jumped as much as 3% in the September 23 postmarket, but then slowed to less than 1% at around $167.5. The securities were up 1.1% to $166.4 in Tuesday's main trading. They have strengthened more than 97% since the beginning of the year.

Micron's revenue grew 46% year-over-year to $11.3 billion in the fourth quarter of fiscal 2025, which ended Aug. 28, exceeding analysts' average estimate of $11.2 billion, Bloomberg reported. Adjusted earnings per share reached $3.03, while market expectations were $2.84.

"We achieved record performance in the data center segment in fiscal 2025 and enter 2026 with strong momentum and the most competitive portfolio ever," said Micron CEO Sanjay Mehrotra. - As the only memory manufacturer in the U.S., Micron is in a unique position to capitalize on artificial intelligence opportunities."

Micron's largest division, which sells memory for cloud service providers, reported sales of $4.54 billion for the quarter, more than triple the previous year's figure. However, revenue at the company's main data center division fell 22% year-over-year to $1.57 billion, CNBC noted.

Micron also projected an adjusted gross margin of 51.5 percent, well above market expectations of 45.9 percent. "The significantly higher projected margin was the main driver for investors," Summit Insights analyst Kingai Chan said in an interview with Reuters. - Pricing has been better than expected."

Optimism about Micron shares increased back on September 11, when analysts emphasized the company's high potential in the data center segment. Thus, Christopher Danely from Citigroup then raised the target price on Micron securities from $150 to $175, assuming that the company "will give a forecast significantly above consensus" when the report is published. He said demand for Micron's products has been higher than expected and is outpacing production, especially in the data center segment, which now accounts for more than half of the company's revenue.

In total, according to MarketWatch, of the 42 analysts tracking the memory maker's securities, 36 recommend buying them, four recommend keeping them in their portfolios, and two recommend selling them. At the same time, Wall Street is not expecting a new rally in the company's shares: the analysts' consensus price target is $166.4, which is roughly in line with current quotes.

This article was AI-translated and verified by a human editor