Micron Technology Earnings: HBM Momentum Continues, and a Better-Than-Expected Third-Quarter Outlook

We maintain our $100 fair value estimate for shares of no-moat Micron Technology after it reported solid fiscal second-quarter results. Revenue came within the guidance range, while adjusted EPS beat guidance as well as our model estimates. Management guided to robust third-quarter growth, supported by improved DRAM demand, especially from data centers and consumer artificial intelligence applications. Looking beyond, we see high-bandwidth memory as a key growth driver. We account for a greater mix of DRAM revenue over the medium term, driven primarily by HBM and data center demand, and boosted by stronger pricing for DRAM. In addition, we foresee cost improvements and a higher-margin product mix to gradually lift margins through 2025 and beyond. The market seems to share our view, and responded positively to results and guidance, with the stock now tracking our fair value estimate.