Carmen Reinicke
Updated 3 min read
In This Article:
(Bloomberg) — Investors looking for new ways to bet on artificial intelligence infrastructure have been piling into an old but often overlooked name: Micron Technology Inc. (MU).
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The maker of memory chips, which reports earnings after market close on Wednesday, has seen its shares roughly double since the S&P 500 (^GSPC) bottomed in April, and is the index’s fifth-best performer over that span. Spending on AI computing gear has sent investors hunting for beneficiaries beyond marquee stocks like Nvidia Corp.
Micron’s growth is being fueled by high-bandwidth memory — bundles of dynamic random access memory chips closely connected to processors from Nvidia — which is vital to AI computing. That’s helped drive up prices as supply remains constrained due to the complexity of producing and deploying such components.
“Micron isn’t the star of AI, the way Nvidia (NVDA) is, but high-bandwidth memory chips are the gold standard for powering AI, and the demand for them is insatiable,” said Joe Tigay, portfolio manager of the Rational Equity Armor Fund.
The Boise, Idaho-based company is expected to report adjusted earnings per share of $1.60 on revenue of about $8.9 billion, according to the average of analyst estimates compiled by Bloomberg. That would be an increase of 158% and 30% from the same period a year ago, respectively.
“Pricing and availability of Micron’s high-bandwidth memory will be a central focus,” said Jake Behan, head of capital markets at Direxion. “Investors will be looking for clarity on production, supply constraints, and how well-positioned Micron is to meet hyperscaler and AI customer demand.”
Profitability will also be top of mind for investors after gross margins fell short of Wall Street expectations in the second quarter. Analysts at NewStreet Research are anticipating a recovery in DRAM and NAND gross margins, which would help Micron beat expectations.
Adjusted gross margins are projected to be 36.8% in the third quarter, down from 37.9% in the previous quarter, according to the average of analyst estimates.
Of course, anything short of a stellar report could trigger a selloff considering the magnitude of the stock’s gains. Micron is up 95% since April 8, the day before US President Donald Trump sparked a relief rally by pausing tariffs.
Options market trading implies a move of 8% for the stock the day after the report, above the average over the past decade, according to data compiled by Bloomberg.
