Micron Technology has been benefiting from the growing adoption of artificial intelligence (AI) in multiple areas. The company’s fiscal 2024 fourth-quarter results showed a 93% year-over-year increase in revenue to $7.75 billion, exceeding analysts’ estimates. Micron also swung to a profit of $1.18 per share, compared to a loss of $1.07 per share in the same period last year.
The memory market’s dynamics have been improving due to AI, with demand for Micron’s data-center memory chips exceeding supply. These chips are used by companies like Nvidia in their AI-focused GPUs, which require high-bandwidth memory (HBM) chips to process large amounts of data quickly. Micron expects the HBM market to generate annual revenue of $25 billion in 2025, up from just $4 billion last year.
AI adoption is also driving demand for solid-state drives (SSDs) used in data centers. Micron’s data center SSD revenue tripled in fiscal 2024, and the company expects this trend to continue as the deployment of AI servers drives an average annual growth of 60% in data-center SSD demand.
Micron’s AI-driven growth prospects
In addition to data centers, Micron is benefiting from the adoption of AI-enabled PCs and smartphones. These devices require higher capacities of memory and storage, with leading PC OEMs launching AI-enabled PCs with a minimum of 16GB of DRAM and Android OEMs introducing AI smartphones with 12GB to 16GB of DRAM. Micron CEO Sanjay Mehrotra stated, “AI PCs require a higher capacity of memory and storage.
As an example, leading PC OEMs have recently announced AI-enabled PCs with a minimum of 16GB of DRAM for the value segment and between 32GB to 64GB for the mid and premium segments, versus an average content across all PCs of around 12GB last year.”
The market for generative AI smartphones is expected to grow at an annual rate of 78% through 2028, while AI PC shipments could jump 165% next year. This presents a significant multiyear opportunity for Micron to grow its sales and earnings. Micron’s guidance for fiscal 2025’s Q1 points to continued momentum, with the company expecting $8.7 billion in revenue and adjusted earnings of $1.74 per share.
This represents an 85% year-over-year increase in revenue and a significant improvement over the year-ago period’s non-GAAP loss of $0.95 per share. Compared to Nvidia, Micron appears to be a more diversified AI stock, as it stands to gain from the adoption of this technology in several ways beyond just data centers. Additionally, Micron’s forward price-to-earnings ratio of 11 is significantly lower than Nvidia’s forward-earnings multiple of 44, making it an attractive investment opportunity considering its impressive growth prospects.
Cameron is a highly regarded contributor in the rapidly evolving fields of artificial intelligence (AI) and machine learning. His articles delve into the theoretical underpinnings of AI, the practical applications of machine learning across industries, ethical considerations of autonomous systems, and the societal impacts of these disruptive technologies.
