Micron Technology's Latest Earnings: Is the Stock Still a Buy in 2025?

PUBLISHED Mar 30, 2025, 3:20:04 AM        SHARE

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imgParkev Tatevosian on YouTube

On Thursday, March 20, 2025, after the U.S. stock market closed, Micron Technology (NASDAQ: MU) announced its fiscal second-quarter financial results. These results pleased investors slightly, as evidenced by a 2% rise in aftermarket trading. Having recommended Micron stock as a buy for over a year, I was encouraged to see continued strong performance. Here’s an updated evaluation of Micron’s earnings, growth prospects, and valuation.

Fiscal Q2 2025 Earnings Highlights

Micron's latest results showcase significant improvements compared to the same quarter last year:

  • Revenue: $8.53 billion, up from $5.82 billion.
  • Operating Income: $1.77 billion, up dramatically from $191 million.
  • Operating Margin: Increased to 22%, up from 3.3% a year earlier.

Micron is rebounding from last year’s cyclical downturn, fueled by growth in data centers optimized for AI and consumer segments. The company’s management anticipates record revenue and improved profitability for the rest of fiscal year 2025, driven by growing demand for DRAM memory and NAND storage products.

Headwinds: Capital Expenditure Concerns

Micron's capital investments have raised some investor concerns. Over the six months ending February 27, 2025, the company spent $7.26 billion on property and equipment—slightly exceeding its $7.18 billion in cash flow from operations. Aggressive spending on capital expenditures echoes challenges seen in companies like Intel, which struggled with ineffective investments and had to pause dividends.

Despite these concerns, Micron’s management appears prudent compared to Intel, and its $9.6 billion in cash and marketable investments offers a strong financial buffer. Investors remain cautious, but the likelihood of these investments paying off leans positive.

Growth Drivers: AI and Data Centers

Micron’s data center business, optimized for artificial intelligence, reported record revenue, tripling from last year. With AI adoption accelerating, Micron expects sustained demand for its memory and storage solutions. This segment, along with a rebound in consumer segments, positions the company for solid growth.

Updated Valuation

Micron’s stock shows significant undervaluation, even after the earnings-driven boost:

  • Discounted Cash Flow (DCF) Intrinsic Value: $139 per share, compared to its current market price of $103.
  • Forward Price-to-Earnings (P/E): 9.4, highlighting undervaluation relative to its growth trajectory.

These metrics indicate ample upside potential, making Micron an attractive option for long-term investors.

Final Recommendation: Is Micron Stock Still a Buy?

Despite concerns about capital expenditure risk, Micron’s strong growth in AI-optimized data center segments, improving profitability, and compelling valuation metrics solidify its position as a buy. I maintain my recommendation and continue to see significant upside for Micron stock, especially as AI adoption drives demand for its products.

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