Micron stock soars 16% on upbeat guidance after swinging to surprise profit in Q2

Investing.com -- Micron Technology (NASDAQ:MU) shares rose about 16% in premarket trading Thursday after the chipmaker swung to a surprise profit in the fiscal second-quarter as memory price hikes boosted performance amid growing AI-driven demand.

For the quarter ended Feb. 29, Micron reported earnings of $0.42 a share on revenue of $5.82 billion, compared with a loss of $1.91 a share and revenue of $3.69B a year earlier. Analysts polled by Investing.com anticipated a loss of $0.26 a share on revenue of $3.74B.

Chipmakers including Micron are riding a wave of demand as the need for hardware including memory chips to power the AI revolution continues to gather pace.

Looking ahead to the fiscal third quarter, Micron sees an adjusted EPS in the range of $0.38 to $0.52, on revenue of $6.60B, give or take 200M. Wall Street consensus was looking for $0.07 on revenue of $5.98B.

In their comments on Micron’s “very strong” print, Goldman Sachs analysts encouraged investors to hop on the MU bandwagon.

“We believe the stock’s YTD underperformance vis-a-vis its peers in Compute and Networking within the context of AI presents an opportunity for investors to buy/own MU ahead of a material ramp in margin-accretive HBM revenue,” analysts led by Toshiya Hari said.

“Furthermore, outside of HBM, we expect the combination of disciplined industry capex and wafer capacity loss stemming from HBM growth to support a sustained recovery in pricing throughout CY2024,” they added.

Goldman hiked the target price on MU stock from $112 to $122 and raised non-GAAP earnings per share (EPS) estimates for fiscal years 2024 and 2025.

(Yasin Ebrahim contributed reporting)