Coming into Micron’s (NASDAQ: MU) fiscal third-quarter earnings report, investors were expecting another round of smashing results, and the memory chip stock delivered.
Revenue jumped 346% year-over-year to $41.5 billion, ahead of estimates at $35.3 billion, and adjusted earnings per share surged from $1.91 to $25.11, topping the consensus at $20.28
However, what’s more important than the third-quarter results is where the company is headed. A shortage in memory chips has sent prices soaring, driven by AI-related demand, sending memory stocks skyrocketing across the board. The memory sector is also notorious for being cyclical, as prices can swing wildly as inventory levels go from shortages to gluts and then back.
The severity of the shortage is evident in Micron’s results. Not only did revenue jump more than 300%, but it also recorded a gross margin of 85%. That’s a better profit margin than even Nvidia is achieving, and means that Micron’s chips are selling for roughly six times their direct costs.