Micron Technology's (MU 5.97%) spectacular third-quarter earnings report last week shouldn't have surprised anyone. All the signs of a blowout quarterly update were in place well before the memory chipmaker announced its results. I predicted that the stock would soar after its Q3 update and was proven right -- but that didn't require Nostradamus-like prophetic skills.
There was more exciting news than the tremendous recent revenue and profit growth in Micron's latest earnings call, though. The company just revealed a massive multi-decade growth opportunity. It's not AI data centers. It might even be bigger.
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The robots are coming
If you weren't paying close attention to Micron CEO Sanjay Mehrotra's comments, you could have easily missed something really important for his company's growth prospects. In his prepared remarks, Mehrotra stated, "Exciting possibilities enabled by robotics and humanoids, as well as fully autonomous vehicles, portend a robust long-term demand environment for memory and storage."
A few minutes later, he added more color, saying, "Humanoid robots carry 10 times the amount of memory as an average L2+ vehicle, and we expect a sustained, substantial, multi-decade memory demand cycle to begin in the latter part of this decade." That's indeed exciting if you're a Micron shareholder.
Mehrotra's reference to the "average L2+ vehicle" was about vehicles with partial driving automation or greater levels of driving autonomy. These vehicles already use more than five times as many memory chips as the average car today. But, as Micron's CEO mentioned, humanoid robots have 10 times more memory than that high level.
Most of the world's largest robotics companies today focus on industrial robots. However, others, including Agility Robotics, Boston Dynamics (owned by Hyundai), Figure AI, and Tesla (TSLA 0.87%), are pioneering advanced humanoid robots that hold tremendous potential.
How many humanoid robots could walk among us in the future? Bank of America (BAC 0.17%) predicts that the number of robots globally could reach 300 million by 2040. The humanoid robot population could top 3 billion by 2060, with more people owning robots than cars.
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Goodbye, cyclicality?
Despite Micron's sizzling performance over the past 18 months, its shares still trade at only around nine times forward earnings. Why is the company's valuation so low? Micron remains a cyclical stock in most investors' eyes. They expect the current supply demand imbalance that is fueling the company's growth to level off within the next few years.
But the promise of a huge new market for humanoid robotics could change the dynamics for Micron. Note that Mehrotra said that this new demand cycle should "begin in the latter part of this decade." The timing could be perfect for Micron if the current AI data center boom moderates around that time, as some expect.
Micron just might be about to say goodbye to the cyclicality of the past. If so, the stock's recent gains could be just the tip of the iceberg.
