3 reasons Micron shares should be higher, not after profits

Memory giant shares Micron (Name: MU) More than 8 % fell last Friday after Thursday’s profits were released late.

But is the market wrong?

Micron has become one of the most important players in artificial intelligence races (AI) over the past two years. While some old microns are currently in a state of stagnation, investors may take the very short term from the approach, and the loss of the artificial intelligence forest of old market trees.

Looking at the last maximum micron profit engine, there have been already many long -term positives that should continue to improve revenues and profits during the rest of this year until 2026.

In the second quarter of the 2025 financial, Micron has grown 38 % on year to $ 8.05 billion, as it was modified (UnpreparedThe arrow’s profitability (EPS) grew by 271 % to $ 1.56. Both numbers came before expectations.

At the back of the solid profits, the stocks rose initially after hours but then fell the next day. The recession appears to be directed, specifically for the total margins in the current quarter. While revenues are expected to increase by approximately 10 % on the quarter, the profits are expected to be flat, as the modified total margins are expected to decrease to 36.5 %, a decrease of 1.5 percentage points, while operating expenses are expected to increase by about $ 100 million.

The short -term traders seem excessively interested in the margin path in the short term. But these concerns are likely to be exaggerated.

Management attributed the impact of the negative margin to an increase in low -marginal consumer electronic memory sales, which will recover after a quarter of a soft. Moreover, the administration noted that the Nand Flash market is still weak. Nand prices have already decreased by a high percentage in the last quarter alone.

However, it appears that negativity is among the most important parts of Micron. NAND was only 26 % of revenues in the last quarter, and all consumer markets have become less important as the Micron Data Data Center business continues to take off thanks to artificial intelligence.

These good trends around artificial intelligence and DRAM will eventually exceed the bad later in 2025, and in the long term investors must also be encouraged through three overwhelming positive trends described in the issuance of profits as well.

Perhaps the most dependent change in the memory industry in recent years is the emergence of the HBM memory used in artificial intelligence applications.

In its previous call in December, Micron indicated that it had witnessed that the HBM market is growing from $ 16 billion in 2024 to $ 30 billion in 2025, then to more than $ 100 billion by 2030. This is a completely huge new segment that would exceed the DRAM industry completely before HBM by that time.

At the same time, a competitor Samsung He is struggling with HBM revenues, and Micron is quickly joined with HBM leader Sk HynixEven Sk Hynix in terms of HBM technology standards while catching a market in terms of market share.

HBM Micron news continues to improve. on Summoning with analystsCEO Sanjay Mahletra now see the HBM market with a value of $ 35 billion this year, with an increase of the previous guidance of $ 30 billion. Micron is also expected to achieve the same market share that you expect before.

Given that Micron has already said that it was sold from his HBM product for 2025, how can the company now exceed its previous goals? In the post -profit call, the administration stated that the increase is due to the fact that the strong manufacturing of Micro has been improved for its previous plans, along with a previous transformation to the high HBM of 8 HBM. The former carries higher prices, so the transition to the most advanced technology is the translation of the winds with revenue.

Micron has also mentioned that she got a third big customer for HBM products as she continues to get her market share here. The quarterly HBM revenue exceeded one billion dollars for the first time – about 12.5 % of the total revenue.

With HBM growth in the margin continues from 12.5 % of revenues today to a much higher percentage, Micron revenues and profits should continue to increase in the medium term.

Micron innovation of artificial intelligence does not stop at HBM. The company has also announced that it has developed a new type of DRAM for a low -energy data center (LPDRAM), as it describes the small attached memory unit, or “Socamm”, which is a low -energy memory specifically designed to use the data center.

Previously, low -energy DRAM was used in smaller devices where energy consumption was very important, such as smartphones. However, Micron is the first to develop this new normative LPDRAM, while providing up to two thirds of energy compared to the standard D5 memory of the data center. Micron developed this memory in cooperation with the leader of artificial intelligence Nafidia (Nasdaq: nvda) Specifically to support Superchip Grace-Blackwell 300 (or GB300) next NVIDIA.

Unlike HBM, Micron was forced to catch SK Hynix, Micron is outside the foreground and the first to manufacture this type of LPDRAM data center in folders. Given the heat and energy requirements for artificial intelligence data centers, the new type of memory also has the ability to generate billions of dollars along with HBM in the era of artificial intelligence.

Finally, there is a great possible chance looming on the horizon of Micron in the largest segment of problems at the present time – Nand Flash. Although the total Nand Flash market is in a state of stagnation, Micron has already collected the market share in the best Nand-long-term Nand-SSDS. The administration noted that Micron has achieved a share in the high market in the data center data center last year and should continue to obtain more share in this sector.

But there may be a great chance on the horizon for SSDS in artificial intelligence databases if the data center operators start using more SSDs Flash to replace the HDDS. Now, the oldest HDD technology is cheaper for wholesale storage. But the problems of arrival time, space and energy consumption in artificial intelligence databases stimulate operators to switch to SSDs. The administration noticed the post -profit summons:

I think that trying to reduce the hard drives in the most big customer. I have seen some ads from Pure storageWe are suppliers, and we are also working with the final customers who want to spread very large SSDS, and remove hard drives from spreading future infrastructure. So it is an exciting opportunity. It will take some time to develop, but as soon as it continues, it will definitely have the effect of snowball.

If artificial intelligence data centers start collecting collectively to hard drives of hard drives, this may really improve the demand for Nand, which was the part that weighs micron margins. If this part improves along with the prosperous AI DRAM industry, Micron’s profits can greatly jump, perhaps in 2026 or 2027.

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Billy Durachtein And/or its clients have functions in Micron technology. Motley Fool has positions in NVIDIA and its pure storage. Motley deception has Disclosure.

The market is wrong: 3 reasons Micron shares should be up, not a decrease after profits It was originally published by Motley Fool