Key Highlights Micron shares rocketed 15.74% Thursday following a fiscal Q3 report showing adjusted EPS of $25.11 and revenue of $41.46 billion, before retreating over 5% Friday morning The c
Micron Technology (MU) shares exploded 15.74% higher Thursday following the memory chip manufacturer’s exceptional fiscal third-quarter earnings report. However, by Friday’s premarket session, the stock had surrendered more than 5% of those gains, hovering near $1,150 as traders took profits after the dramatic surge.
The financial results were undeniably impressive. Micron delivered adjusted earnings per share of $25.11 against revenue totaling $41.46 billion. The adjusted gross margin reached 84.9%. Looking ahead to Q4, management projected adjusted EPS around $31 with revenue approaching $50 billion.
CEO Sanjay Mehrotra emphasized during the earnings conference call that customers now understand memory and storage supply constraints “will take considerable time to improve.” He further explained that despite anticipated gradual supply increases expected around 2028, the company currently sees no clear timeline for when memory supply will meet market demand.
The industry-wide memory shortage traces back to strategic decisions made during the post-pandemic downturn. Throughout 2023, Micron experienced negative gross margins across four consecutive quarters and significantly reduced capital expenditure commitments. These choices have now created the most constrained supply environment the sector has witnessed.
Additional manufacturing capacity won’t arrive until approximately 2027, with further additions planned for 2028. This extended timeline is providing Micron with unprecedented pricing authority.
Micron has capitalized on this favorable position by securing customers into three-to-five-year take-or-pay commitments featuring price floors, ceilings, and upfront cash deposits. The company has finalized 16 such arrangements to date, which will represent approximately 40% of revenue when fully implemented.
The price floor established in these agreements sits “well above” the highest quarterly margins achieved in any previous cycle, according to Mehrotra. For context, the prior peak reached 61% during Q4 2018. Half of Micron’s quarterly results since 2010 registered below 32% gross margin — making the locked-in 60%+ floors extending through 2030 a fundamental transformation rather than cyclical volatility.
BNP Paribas analyst Karl Ackerman characterized this as a “transformative shift towards long-term supply agreements,” which strengthens demand visibility and diminishes cyclical exposure. Bank of America’s Vivek Arya elaborated further on CNBC, stating the memory sector is experiencing structural evolution rather than typical cyclical patterns, fueled by AI-driven demand and improved supply discipline. He highlighted that memory now represents 35–40% of cloud infrastructure capital expenditures.
Following the quarterly announcement, 35 out of 42 analysts monitored by FactSet increased their earnings projections. The forward consensus EPS estimate surged to $144.27 from $101.74 recorded just one month prior.
Barclays elevated its price target to $2,000. Citigroup adjusted upward to $1,400. Goldman Sachs, maintaining a Neutral stance, increased its target to $1,100. The mean analyst price target among 50 Buy-rated analysts currently registers at $1,477.17.
Despite the post-earnings surge, the shares continue trading at less than 10 times forward earnings by certain metrics — substantially below the S&P 500 valuation multiple.
Micron reached a 52-week peak of $1,255 in June. Major resistance exists at that threshold, while the closest support level sits at the 20-day moving average around $1,025. During Friday’s premarket trading, MU was changing hands near $1,150.
The post Micron (MU) Stock Rockets 15%, Then Retreats: Wall Street’s Reaction to Blockbuster Earnings appeared first on Blockonomi.
