Micron Technology Stock Touches Record High as Revenue Soars

MU stockMU Stock Shatters Expectations for Second Quarter

Micron Technology, Inc. (NASDAQ:MU) stock shot up by about 1.6% in Thursday’s trading session, to close at $26.47.

The company announced stellar results for its fiscal second quarter on Thursday. MU stock was up by more than 10% in extended trading, and is set to touch a new 52-week high on Friday.

Micron’s results for the second quarter of fiscal 2017 beat all expectations. Revenues reported for the quarter were $4.65 billion, an increase of 58% year-over-year. Sequentially, the revenues were up by 17%, primarily on account of a 21% increase in the average selling price of dynamic random-access memory (DRAM) and an 18% increase in NAND flash memory sales volume. DRAM represented about 64% of Micron’s total revenue in the quarter. (Source: “Micron Technology, Inc., Reports Results for the Second Quarter of Fiscal 2017,” Micron Technology, Inc., March 23, 2017.)

CEO Mark Durcan said that the strong demand and limited supply for NAND and DRAM solutions, combined with significant progress on Micron’s cost reduction plan, produced excellent results for the second quarter. Last year, there were concerns whether the cost-cutting strategy will work out, but Micron has been successful in achieving this target. This is another reason for Micron Technology stock breaking previous records.

One of the brights spots in the results was that revenue growth was driven by strength across all market segments, not just a few. “I’m proud of the team’s execution on critical technology and operational initiatives, which will allow us to continue to capitalize on market trends,” said Durcan.

The mobile business unit update is particularly interesting as the company works on its multi-chip package (MCP) strategy, with more than 20 new designs coming within the next year. Further, the company’s embedded unit saw record automotive revenue for the fourth quarter in a row.

The adjusted earnings came in at $0.90 per share, as compared to $0.32 for the previous quarter, and are expected to go higher this year. The MU stock chart below shows the stellar gains of 138% posted over the last year, as compared to the S&P 500 that has returned 15% over the same period.

MU stocks

Chart courtesy of StockCharts.com

Another factor working in favor of Micron Technology stock is that the company benefits from the success of the Apple Inc. (NASDAQ:AAPL) “iPhone 7,” as the chip-maker is an important supplier to the smartphone company.

Micron Technology provides optimized memory and storage systems for a broad range of applications, and is transforming how the world uses information-delivering solutions. With high growth expected in areas like gaming, Internet of Things (IoT), and virtual reality (VR), the future holds lot of potential for the company and the price of MU stock.

As always, the top investor concern remains how long the current demand and pricing will last. Going by the statements of the CEO, there do not appear to be any signs of the cycle peaking anytime soon. Mark Durcan believes that the company is headed into the third quarter with a strong market environment and steady progress on the company’s technology initiatives.

It has been a long wait for the leader in innovative memory solutions, but today the company has been able to restructure itself and become stronger. The uptrend that began in 2016 is likely to continue this year. Memory chip prices post big fluctuations but, until the time that demand is more than the supply, Micron Technology stock is not likely to face any major challenge.

To strengthen its position in the age of new computing platforms, Micron has always looked at an inorganic growth strategy. The company’s march to global leadership began with the acquisition of Texas Instruments Incorporated‘s (NASDAQ:TXN) DRAM business in 1998.

Since then, Micron has made a number of acquisitions, the most recent being Inotera Memories Inc in 2016 and Tidal Systems, Inc. in 2015. The company has been able to make the most of its strategic acquisitions, and this bodes well for MU stock.  

Given the current growth and focus of the company, the future looks promising and Micron Technology stock investors are unlikely to be disappointed.