Micron’s $50 Billion Forecast Fuels Bullish Case Ahead of Earnings

Micron Technology forecast fiscal fourth-quarter revenue of $50 billion, plus or minus $1 billion, as demand for memory chips surges. The company’s September 30 earnings report will show whether sales and margins are keeping pace with that outlook.

The forecast follows a record fiscal third quarter. Micron reported $41.46 billion in revenue for the quarter ended May 28, up from $9.30 billion a year earlier.

Memory pricing drove much of that growth. DRAM revenue rose 343% year over year to $31.3 billion, while NAND revenue climbed 361% to $9.9 billion, according to Micron’s earnings materials. The company also forecast a fourth-quarter gross margin of about 86%.

Micron’s bullish case extends beyond one quarter. It said 16 strategic customer agreements cover about 20% of its DRAM volume and one-third of its NAND volume through 2030. Fourteen agreements represent about $100 billion in minimum revenue over their remaining terms.

Those contracts offer more visibility into future sales, but they do not eliminate the risk of a downturn. Memory has historically been a cyclical business: if supply catches up with demand, chip prices and profits can fall quickly.

Barchart’s buy case also points to a low forward earnings multiple of about 6.4. That figure depends on profit forecasts; a low multiple can be less reassuring if earnings are near a cyclical peak.

The September 30 report is the next test for the investment case. Investors will be watching whether Micron meets its $50 billion sales outlook and whether management sees tight supply and strong pricing continuing into future quarters.