After Nvidia announced its quarterly financial results on August 28, is there a possibility of MU experiencing a sharp increase?
Nvidia's AI GPU is equipped with a special type of memory known as High Bandwidth Memory (HBM) to accelerate AI workloads. $Micron Technology (MU.US)$ ）is one of the companies supplying this chip to graphics card specialists. In the earnings call in June, Micron's management stated that the company expects to generate 'hundreds of millions of dollars' in HBM revenue in the fiscal year 2024 ending this month, and then 'generate billions of dollars in HBM revenue in the fiscal year 2025'.
It is noteworthy that Micron has sold out the HBM capacity for 2024 and 2025. However, the company aims to expand its customer base and gain a larger share in this market by developing HBM chips that offer higher power and efficiency. Considering that the HBM market is forecasted to generate revenue of $14 billion this year from just $5.5 billion last year, and reach $20 billion in revenue by 2025, this is a wise move.
The significant growth in the HBM market is directly proportional to the increasing demand for AI chips, as companies like Nvidia and AMD are cramming more HBM memory into their products. The good news is that the rapid growth of the AI-driven memory market is turning Micron's fate around, leading to margin recovery and revenue growth for the company.
Analysts expect Micron's revenue to increase by 61% to $25 billion in fiscal year 2024, followed by a 54% increase to $38.6 billion in fiscal year 2025. Whereas a loss per share of $4.45 in fiscal year 2023 is expected to turn into profit this year. However, the stock price performance has been volatile recently, dropping by 25% in the past few months. Currently, the stock is trading at a very attractive level of 12 times future earnings.
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