AI Is Still Burning Cash, But Micron Is Already Raking in the Profits — A 100% Surge and Its Hidden Risks

TradingKey – U.S. memory chip giant Micron Technology (MU.US) recently released strong quarterly guidance that has captured widespread market attention.

The company expects its fiscal Q4 revenue to reach approximately $10.7 billion , well above analysts’ average forecast of $9.89 billion . Adjusted earnings per share are projected at $2.50 , significantly outperforming the expected $2.03.

Spurred by the positive outlook, Micron’s stock jumped over 7% in after-hours trading . From its year-low of $61.5 on April 7 , Micron shares have surged more than 100% to $127.2 , making it one of the top-performing tech stocks this year. However, concerns about overbought conditions and stretched valuations led the stock to pull back slightly post-market close despite earlier gains.

[Micron Technology Year-to-Date Chart | Source: TradingKey]

Market participants widely believe that the AI boom is the main driver behind Micron’s impressive rebound. As AI models become increasingly complex, demand for high-performance memory products like High Bandwidth Memory (HBM) continues to rise. Micron, as a global leader in memory and storage solutions, is reaping significant benefits from this trend. Its HBM products are already being used extensively in AI chips from companies like NVIDIA and others.

In its third fiscal quarter, ended May 29, Micron reported year-over-year sales growth of 37% to $9.3 billion , with adjusted EPS reaching $1.91 , far exceeding forecasts.

Dan Morgan , Senior Investment Manager at Synovus, pointed out that aside from AI, Micron is also expanding into emerging sectors such as electric vehicles and gaming chips , which further diversifies its growth drivers.

Currently, Micron's market cap is rising steadily, making it one of the standout performers in the semiconductor industry this year. The stock's rally also reflects growing investor confidence in the entire AI hardware supply chain .

Morgan Stanley recently published a report stating that while Micron’s share price has already surged significantly, they maintain a "neutral" rating on the stock. However, the firm remains optimistic in the short term , citing accelerating AI investment and increasing Micron’s exposure to the AI sector.

TradingKey Analysts' Target Price : $124.9
With the current uptrend showing strength, investors should remain cautious and manage risk carefully.