Micron Technology (MU) shares powered higher Wednesday after the biggest U.S. chipmaker posted stronger-than-expected second quarter earnings paired with a robust near-term outlook.
Micron's second quarter profit of $2.14 per share handily beat the Street consensus forecast of $1.97, while revenues came in nearly 25% higher from last year at $7.8 billion, a figure Micron said could rise to between $8.5 billion and $8.9 billion in the current quarter, as prices for its NAND and DRAM memory chips continue to rise amid solid global demand.
DRAM revenues, which represent around three quarters of Micron's top line, rose 2% from the prior period to $5.72 billion, while NAND revenues were up 4% from the prior quarter to $1.96 billion.
DRAM bit growth, Micron suggested, would likely grow by a 'mid-to-high' single digit percentage this year, thanks in part to data center sales linked to companies expanding their cloud and hybrid platforms over the coming months.
"Data center is the largest market for memory and storage, and we expect it to outpace the broader memory and storage market over the next decade," Sanjay Mehrotra told investors on a conference call late Tuesday. "We anticipate underlying demand in calendar 2022 to be led by increasing volume of data center server deployments, 5G mobile shipments and continued strength in automotive and industrial markets."
"Non-memory supply shortages have constrained customer bills and pushed out some demand across many end markets," he added. "While these shortages may cause some variability to our demand, we expect them to ease through 2022, supporting memory and storage demand growth."
Micron shares were marked 3.6% higher in early Wednesday trading to change ahnds at $85.35 each, a move that would trim the stock's year-to-date decline to around 8.75%.
"A few things from the call that stood out to us included the company’s confidence on the GM trajectory for the business," said BMO Capital Markets analyst Ambrish Srivastava, who carries an 'outperform' rating with a $115 price target on the stock.
"While we know how hard it is to predict pricing in the industry, our walkaway was that the company likely has a much better line of sight into cost downs over the next few quarters."
