The past few weeks have been rough for technology stocks. The sector has been hammered by the tariff-induced trade war, which has led investors to book profits and enter a risk-off mode amid concerns regarding a potential economic slowdown.
This explains why, at the time of this writing, the Nasdaq-100 Technology Sector index has pulled back 13% in the past month. Not surprisingly, Micron Technology (MU 2.35%), one of the components of the Nasdaq-100 index, has witnessed volatility on the stock market this year. However, recent results from semiconductor peer Broadcom indicate that the market's willing to reward stocks that are clocking robust growth and have a positive long-term outlook.
That's why it wouldn't be surprising to see Micron stock get a nice shot in the arm when it releases its fiscal 2025 second-quarter results on March 20. Let's see what's expected from Micron's upcoming quarterly report, and check why its numbers and guidance could land ahead of Wall Street's expectations.
NASDAQ: MU
Key Data Points
Micron Technology could report another explosive quarter
Micron started fiscal 2025 with a stunning quarterly report released in December 2024 that revealed remarkable growth in the company's revenue and a massive improvement in its bottom line. However, the memory specialist's guidance fell short of lofty expectations. Micron is expecting $1.43 per share in adjusted earnings on $7.9 billion in revenue in fiscal Q2.
That would translate into a 36% increase in its top line, while earnings would more than triple on a year-over-year basis. Micron's trailing earnings multiple of 29, which is almost in line with the Nasdaq-100 index's earnings multiple, suggests that it is a terrific bargain considering the remarkable earnings growth that it's clocking.
More importantly, there's a good chance that Micron's numbers could land ahead of expectations. A key reason why the guidance that Micron issued in December 2024 fell short of expectations was the weakness in consumer-oriented end markets. However, these markets are now showing signs of revival.
Personal computer (PC) shipments increased 1.8% year over year in the fourth quarter of 2024, according to market research firm IDC. That was a big improvement over the 2.4% drop seen in the third quarter of last year. This could lead PC manufacturers to start restocking components, such as memory and storage products, that Micron sells.
The smartphone market also ended 2024 with an increase in shipments during the fourth quarter. Micron management pointed out on the December earnings conference call that it sees memory inventories in consumer markets reaching healthier levels in the second half of the fiscal year. This further suggests that restocking of memory chips could have already begun.
The 10% additional tariff imposed by the Trump administration on imports from China could be favorable for Micron, considering that it has been investing aggressively to ramp up its manufacturing capacity in the U.S. over the past few years. Its U.S. manufacturing footprint could help it land more orders from customers looking to mitigate the potential jump in manufacturing costs as a result of the tariffs.
Investors shouldn't miss this major catalyst
Another reason Micron seems well-placed to outgrow expectations in the current quarter is that one of its key customers -- Nvidia -- sold more of its next-generation processors than expected last quarter. Nvidia management remarked on the February earnings conference call that sales of its Blackwell artificial intelligence (AI) processors exceeded expectations.
The semiconductor giant is focused on quickly expanding its supply to support the rapidly growing adoption of Blackwell. This bodes well for Micron, as its high-bandwidth memory (HBM) chips have been qualified for deployment in Nvidia's Blackwell processors. Moreover, Nvidia's Blackwell graphics cards carry 36% higher HBM when compared to the previous generation Hopper H200 chip.
So, Micron could witness a significant bump in shipment volumes and the average revenue it generates from each Nvidia graphics card because of the higher memory content. Moreover, Nvidia's projection of a 65% year-over-year jump in revenue in the current quarter suggests that the remarkable growth of its data center business is here to stay on account of the solid demand for its AI GPUs (graphics processing units).
This could have a positive effect on Micron's outlook. Analysts are expecting Micron to guide for a 21% year-over-year jump in revenue for Q3 of fiscal 2025. However, the anticipated recovery in consumer markets which Micron is predicting in the second half of the year, along with the continuous growth in the HBM market, could help it exceed analysts' expectations as far as the fiscal Q3 outlook is concerned.
After all, the HBM market is expected to clock an annual growth rate of 42% through 2033, and it's likely to become a major growth driver for Micron both in the short and the long run. All this makes Micron a solid tech stock to buy in the wake of the recent sell-off in tech stocks, as there's a good chance that it could jump higher following its upcoming quarterly report on March 20.
