25-06-2025
Here's what drove Micron's major Q3 revenue beat
Micron's (MU) third quarter earnings results beat estimates; in particular, its data center sales surged on artificial intelligence (AI) demand.
Cory Johnson, Epistrophy Capital Research chief market strategist and host of "The Drill Down" podcast, joins Market Domination Overtime to explain what's driving Micron's growth.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
Let's get some more reaction to Micron earnings. Joining us now is Corey Johnson, chief market strategist at Epistrophe Capital Research and host of the Drill Down podcast. Corey, Micron reports, at least initially, investors like what they see. The stock is surging in the after-hours. But give me your your initial take, Corey, on on the report.
I have to tell you when I was looking at my model over the weekend, I thought, I must be insane to be looking over nine billion in revenue. What am I doing wrong here? And I look, and they put up this print of over $9 billion in revenue, $9.3 billion in revenue. And it was driven by the things that I I wrote about in my previous note, Joshua sent you as well, which is talking about high bandwidth memory, talking about sales into the data center. We knew that they were sold out going into the quarter. But the nature of the way they were sold out and what they were selling was so interesting. This high bandwidth memory, it is not only different than DRAM of old, uh right now, you know, so if you want to think about it in a very basic way, it's like stacking up pancakes of memory, all working on top of each other, and then then stacked up really close to the GPU. Used to be memory was sort of more dispersed on a circuit board. And it allows a GPU in a data center to access a lot more memory at any given moment, and it allows the work of both inference and training and inference to happen uh in the data center of an AI model. And they're selling this stuff like pancakes, like hotcakes, right? I don't really know what a hotcake is. Joshua might. But I um they're selling these things like crazy, and they're selling them out, and they're selling them at better and better margins. And and it's a really impressive product. What's curious, and I'll be listening in the conference call to hear, are any hints that they might have a lasting advantage here? So, traditionally, what we've seen from Micron is selling kind of the same product as their two big competitors in Hynix and Samsung. But with high bandwidth memory, and to be clear, uh they weren't the first ones out there with high bandwidth memory, but they seem to be leading and growing market share. And the question here is, are there process advantages that they have that can last for a while to help them grow even faster than the market, and indeed, some IP advantages? That's what we're listening for.
And and Corey and and Josh, I just want to mention some other numbers are in the press release around what Corey is talking about here. So, the company said it saw an all-time high in DRAM revenue. That's dynamic random access memory. That includes the high bandwidth memory sub category that we're talking about, which saw 50% sequential growth, data center revenue more than doubling, which and with that a quarterly record. But I think, Corey, to your point, the real question here is whether what was this fundamentally commoditized business that was very cyclical, whether it has changed over the long term, whether it's sort of muted but still in effect, right? You know, how how much has this sort of changed the calculus? We saw how much it changed the calculus for Nvidia. I mean, most semiconductor companies were sort of cyclical and commoditized. Um and and we're seeing that become less so. So, I guess we just have to figure out if if Micron's going to fall into that category.
And also what they can charge for it, right? Can they charge their customers so much more because they are sold out? Are they looking at the long term? I mean Micron has never gone below above 60% margins. I think their all-time record is something like 59.5, 59.4 or something. Uh and indeed, in my modeling of this company, I'm trying to figure out, can they get to a higher number here? Do they, knowing the cyclicality of semiconductors, and no one knows that more than Micron, can they, in fact, start to take more profit from their customers, or do they risk the chance of pissing off their customers and not wanting to make that that decision? Now, Nvidia has decided to take margins of better than 70% in a business that was once barely profitable. Let's see if Micron next who decides to do that, and again, what we hear in the conference call, but this is such an exciting time to cover enterprise technology, and the fact that Micron, which used to make just boring DRAM in the heart of Idaho, is is now um making such an interesting product and such a technologically advanced product in high bandwidth memory, it just shows what an exciting time um uh AI has given us uh in this in this moment in enterprise tech.
