Micron Technology, Inc. (MU) will release its fourth-quarter fiscal year 2024 results on September 25, following market close.
MU Quarterly Earnings Projection
The business estimates $7.6 billion in revenue for the fourth quarter of its fiscal year (+/- $200 million). With a top-line estimate of $7.64 billion, analysts estimate a robust annualized expansion of 90.5%.
In the interim, Micron projects adjusted revenue of $1.08 (+/-8 cents). Over the last 60 days, the average consensus identified for the bottom path has increased by 2 cents to $1.10 per share, indicating a significant improvement over the $1.07 loss from last year's quarter.
How AI Adoption Could Affect The MU?
The increasing adoption of artificial intelligence (AI) systems with graphics processing unit (GPU) support is expected to drive up memory chip demand, which is expected to significantly boost Micron's fourth-period outcomes. Memory becomes an essential component as data center operators increase the capabilities of their systems with GPU-powered massive language models and generative AI. Micron's earnings for the to-be-reported period most likely increased due to this spike in consumer preference for AI servers.
Another factor bolstering Micron's achievement is the expanding memory chip market's supply-demand equilibrium. For a few quarters, Micron's financial results were negatively impacted by excess inventory in multiple sectors. The company has, however, experienced improved circumstances over the last three quarters, which have permitted an increase in the cost of NAND and DRAM memory chips, both of which are essential to its operations.
Micron Stock Bearish Factors
Certain difficulties might have reduced the overall gains even with these encouraging factors. Consumer spending has decreased due to rising inflation and worries about a possible global economic recession. This has weakened interest in memory chips in two of Micron's important markets: smartphones and personal computers.
A possible drawback of Micron's substantial dependence on China is the continuing dispute over trade between the US and China. A larger percentage of lower-margin NAND goods and relatively few cost reductions during production could also pressure the company's profit margins.
Micron is experiencing favorable market conditions, substantial growth across several business units, and excellent sales executions. Top-line expansion is being aided by the benefits of data center stock enhancement and market stabilization in other areas, such as automotive and industrial.
MU Bull Cases
MU expects revenues to rise in the upcoming year due to higher DRAM and NAND chip prices. Rising AI systems should be the main driver of the pricing benefits, creating a shortage in innovative DRAM and NAND supply. Additionally, adopting 5G in wireless networks and Internet of Things devices will probably increase the need for storage and memory.
Still, a great deal of risk is associated with the continuing dispute over trade between the US and China. Due to Micron's being subjected to the Chinese market, a deterioration of trade disagreements could cause supply chain disruptions or new tariffs, both of which could have a detrimental effect on margins.
Although the price perspective for memory chips is favorable, the company's immediate profitability gains may be constrained by its dependence on lower-margin NAND items and its sluggish progress in reducing manufacturing costs.
MU Stock Forecast Technical Analysis
In the daily chart of MU stock price, the recent price remained sideways and traded below the crucial resistance of the 200-day Simple Moving Average.
In the higher timeframe, the monthly candle remained bearish for two consecutive months, while the latest price hovers above the August 2024 low. In this context, the upward continuation is potent as long as the 84.72 low is protected.
In the main chart, the 50-day EMA crossed below the 200-day SMA, suggesting a Death Cross formation. In that case, if the Micron stock price holds the selling pressure below the 50-day EMA, we may expect a downside continuation below the 90.00 area.
On the other hand, an immediate bullish reversal with a stable market above the 104.42 resistance could initiate a trend reversal, aiming for the 150.00 level.
