Micron Stock Up Thanks to Chip Demand, as Company Expects ‘Record Revenue’ in 2022

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Memory chip maker Micron Technology (NASDAQ: MU) saw its shares jump after trading following its earnings releases, which beat expectations, combined with an upbeat financial guidance thanks to increasing demand for its chips, mostly from data centers and electric vehicles (EVs).

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Shares climbed almost 7% in after-hours trading following its better-than-expected earnings call, Seeking Alpha reported. As of midday Dec. 21, the stock was up nearly 11%.

For the first quarter of fiscal 2022, which ended Dec. 2, Micron’s revenue was $7.69 billion, compared to earning $5.77 billion in revenue in the same period a year ago, according to the release.

Sanjay Mehrotra, President and CEO, said in a statement on Dec. 20 that the company’s guidance for With FQ2 is an expected revenue of $7.5 billion, and earnings per share are expected to be $1.95: “Our FQ1 results and FQ2 outlook keep us on track to deliver record revenue and solid profitability and free cash flow in FY22.”

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These figures compare with analysts’ average estimate of $7.32 billion, and projected EPS of $1.86, according to Bloomberg.

In an earnings call, Mehrotra said he expected automotive and industrial to be the fastest-growing memory and storage markets over the next decade, “and we are exceptionally well positioned as a market share leader with over 10% of our revenue coming from these end markets,” according to a transcript of the call. He added that new EVs “are becoming like a data center on wheels.”

“The auto and industrial certainly will be high-growth drivers for us across the cycle. I spoke to all the demand drivers in the automotive market. Micron is clearly an automotive leader in this space,” Mehrotra said on the call. “And this year, we would expect to continue to grow based on all our experience in this market, our share leadership, the high quality we provide and increasing demand for memory and storage content in these markets.”

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CFRA Research kept its “Buy” opinion on Micron following the earnings release. “We remain optimistic about supply/demand dynamics in CY 22 and think investors continue to underestimate MU’s improving financial position ($4.5B net cash), with at least 50% of FCF to be returned to shareholders. We see ongoing shift to high-margin offerings (DDR5, SSD) supporting a better margin profile,” Angelo Zino, senior equity analyst at CFRA Research, wrote in a note sent to GOBankingRates.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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