Memory chips maker Micron (NYSE: MU) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 38.3% year on year to $8.05 billion. On top of that, next quarter’s revenue guidance ($8.8 billion at the midpoint) was surprisingly good and 3.2% above what analysts were expecting. Its non-GAAP profit of $1.56 per share was 9.5% above analysts’ consensus estimates.
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Micron (MU) Q1 CY2025 Highlights:
- Revenue: $8.05 billion vs analyst estimates of $7.90 billion (38.3% year-on-year growth, 1.9% beat)
- Adjusted EPS: $1.56 vs analyst estimates of $1.42 (9.5% beat)
- Revenue Guidance for Q2 CY2025 is $8.8 billion at the midpoint, above analyst estimates of $8.53 billion
- Adjusted EPS guidance for Q2 CY2025 is $1.57 at the midpoint, above analyst estimates of $1.52
- Operating Margin: 22%, up from 3.3% in the same quarter last year
- Free Cash Flow was -$113 million compared to -$165 million in the same quarter last year
- Inventory Days Outstanding: 161, up from 148 in the previous quarter
- Market Capitalization: $113.7 billion
“Micron delivered fiscal Q2 EPS above guidance and data center revenue tripled from a year ago,” said Sanjay Mehrotra, Chairman, President and CEO of Micron Technology.
Company Overview
Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE: MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.
Memory Semiconductors
The rapid growth in data generation and the need to support increases in processing power for everything from consumer devices to data center servers are driving the demand for memory chips. From the content delivery networks and edge computing to the cloud, data storage is a key component underpinning the global technology architecture. On top of that, secular growth drivers like machine learning and the boom in media-rich digital content are further accelerating the need for storage. Like all semiconductor segments, memory makers are highly cyclical, driven by supply and demand imbalances and exposure to consumer product cycles.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Micron’s sales grew at a decent 9.8% compounded annual growth rate over the last five years. Its growth was slightly above the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Micron’s annualized revenue growth of 16.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
This quarter, Micron reported wonderful year-on-year revenue growth of 38.3%, and its $8.05 billion of revenue exceeded Wall Street’s estimates by 1.9%. Beyond the beat, this marks 6 straight quarters of growth, showing that the current upcycle has had a good run - a typical upcycle usually lasts 8-10 quarters. Company management is currently guiding for a 29.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 25.5% over the next 12 months, an improvement versus the last two years. This projection is eye-popping for a company of its scale and indicates its newer products and services will catalyze better top-line performance.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Micron’s DIO came in at 161, which is 20 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.
Key Takeaways from Micron’s Q1 Results
We were impressed by how Micron beat analysts’ revenue and EPS expectations this quarter. We were also glad its revenue and EPS guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its inventory levels materially increased. Still, we think this was a solid quarter with some key areas of upside. The stock traded up 4.7% to $107.71 immediately following the results.
Indeed, Micron had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
