Micron increased its profits by 1,215% and issued a forecast that exceeded market expectations. Its stock soared.

Micron, an American semiconductor manufacturer, reported that its revenue more than quadrupled and its profits increased 13-fold. In addition, the company's sales and profit forecasts were significantly better than Wall Street had expected.

The company's shares rose more than 13% in after-hours trading on June 24. The main trading session ended with a 0.3% decline.

The company's revenue for the third quarter of fiscal year 2026, which ended on May 28, was $41.46 billion: that's 346% more than in the same period a year ago and 74% more than in the second quarter. Analysts had forecast $35.9 billion, MarketWatch reported, citing data from FactSet.

Earnings per share soared by 1,215%, reaching $25.11 compared to $1.91 a year ago, according to MarketWatch. The company also comfortably exceeded analysts' consensus estimate of $20.83.

For the current quarter, Micron expects to report revenue of $50 billion and adjusted earnings per share of approximately $31. According to FactSet, Wall Street had expected $43.6 billion and $25.72, respectively.

Micron has signed 16 long-term agreements with customers, including data center operators and automakers, that guarantee purchases for a period of three to five years, Micron CEO Sanjay Mehrotra said during the company’s quarterly earnings conference call, CNBC reports. “Once these agreements are fully in effect, we expect them to account for roughly half or even a larger portion of the company’s revenue,” the executive noted.

The company expects the total financial obligations under these contracts to amount to $22 billion. “We are gaining a clearer understanding of future demand. These are guaranteed purchase volumes, which allow us to plan our investments with greater confidence,” said CFO Mark Murphy (as quoted by CNBC).

Historically, the market has viewed Micron as a cyclical memory manufacturer whose profits can plummet once the latest period of shortages in PC and server components comes to an end, according to Bloomberg. Waves of rising and falling demand were linked to cycles of consumer hardware upgrades.

But now investors are beginning to view the company as a more stable business thanks to long-term supply agreements that make future revenues more predictable, the agency explains. As a result, the P/E ratio—which reflects the relationship between a company’s share price and its future annual earnings—has risen from 4.4 in April to 11.5.

In addition, memory manufacturers are struggling to keep up with demand for memory chips, which has led to shortages in segments such as computers, smartphones, automobiles, and AI chips. Although Micron is expanding its production capacity, memory prices are expected to remain high for the foreseeable future, according to Bloomberg.

“Our customers understand that the shortage of memory and data storage systems cannot be resolved quickly. Even though we expect a gradual increase in supply in the industry by 2028, it will take a considerable amount of time to restore the balance between supply and demand,” Mehrotra said.

Micron is partnering with Nvidia, the leading manufacturer of artificial intelligence processors, to integrate its HBM memory into AI infrastructure. Earlier this month, Nvidia CEO Jensen Huang confirmed that the company will use Micron’s HBM4 memory alongside solutions from its competitors for its next-generation Vera Rubin platform, according to Bloomberg.

On June 24, BofA Securities raised its price target for Micron shares from $950 to $1,500, maintaining its “Buy” rating. The bank believes that the memory shortage and strong demand from the AI sector will support the company’s prices and earnings for longer than previously expected.

Earlier in June, Needham also raised its price target for Micron shares from $500 to $1,550, maintaining its “Buy” rating, while RBC Capital raised its target from $525 to $1,200, maintaining its “Outperform” recommendation.

Most analysts tracking the memory manufacturer’s stock recommend buying it: the stock has 46 Buy and Overweight ratings out of a total of 49, according to MarketWatch. Two others recommend holding the stock (Hold), and one recommends selling (Sell). Wall Street’s consensus price target is $1,123.3, which is 7% higher than the closing price at the end of regular trading on June 24.

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