What happened
Shares of memory chip specialist Micron Technology (MU +5.27%) were up big today, surging 9.6% as of 11:40 a.m. ET.
The rise comes on the heels of Monday afternoon's latest quarterly earnings report, which beat analyst expectations with a side dish of strong guidance. On top of the strong numbers, CEO Sanjay Mehrotra also spoke positively about Micron's operational progress against competitors.
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So what
In its fiscal first quarter, which ended Dec. 2, Micron grew revenue 33.1% from the same period the year before, and adjusted earnings per share (EPS) came in at $2.16, with both figures beating analyst estimates. Not only that, but management also delivered strong guidance, projecting next quarter's revenue between $7.3 billion and $7.7 billion and adjusted EPS between $1.85 and $2.05. While those figures would represent flat or declining sequential growth, the fiscal second quarter is usually seasonally lower, and that guidance was actually above analyst expectations.
Mehrotra called out a few pockets of very strong growth that he expects to continue through 2022. These include the data center, where sales grew 70%, due to strong cloud demand as well as the return of enterprise data center spending. Another strong leg of growth was the industrial Internet of Things, or factory automation, which saw revenue growth of 80%.
Meanwhile, management said the PC weakness the company mentioned in the previous quarter, which caused the stock to fall, is now "largely behind" the company. Remember, that weakness wasn't due to lower customer demand, but rather due to a shortage of non-memory components that held up production. Management expects the new hybrid work environment to lead to similar PC sales in 2022 relative to the elevated levels in 2021, so that was also bullish.
Now what
Micron had been one of the cheapest stocks in all of technology heading into the month, and remains so even after today's surge. While the stock had dipped over the summer on that PC slowdown fear, it appears that was a blip and not the beginning of a typical cyclical downturn. Management now sees 2022 being a record revenue year with "strong profitability."
Perhaps most important for long-term investors, management also said Micron now has a "multi-quarter" lead in leading-edge process technology across both DRAM and NAND flash. Micron used to lag behind its large South Korean competitors, so to see it surge into the process lead over the past few years is a very positive thing, and should foster better results than Micron has put up in the past.
