Today after the market closes, memory chip giant Micron Technology (MU) is scheduled to release its fiscal fourth-quarter 2025 earnings. Following the company's strong upward revision of its own guidance in August, expectations are running high, driven by the booming demand for artificial intelligence (AI) hardware.

Micron initially projected revenue of $10.7 billion for the quarter but raised its forecast to $11.2 billion on August 11 in a mid-quarter update. The company also increased its guidance for adjusted EPS from $2.50 to $2.85. Many analysts are even more bullish into tonight’s earnings report as we have seen multiple price target hikes over the last couple of weeks. Zacks Investment Research predicts earnings of $2.82 per share on $11.1 billion in revenue, with a positive Earnings ESP (Expected Surprise Prediction).

The immense growth in AI development is the primary force behind Micron's stellar performance and here's why:

High-Bandwidth Memory (HBM): The chips that power AI servers, such as those made by Nvidia (NVDA) and AMD, rely on Micron's advanced High-Bandwidth Memory (HBM). Micron has already started high-volume shipping of its HBM3E chips and is one of only two qualified suppliers for next-generation HBM4. Record demand from data centers, driven by AI servers, has contributed to record data center revenue for Micron for four consecutive quarters as of 3Q 2025.

The strong demand and disciplined supply in the market have led to improved pricing for both DRAM and NAND memory chips. This is expected to boost the company's revenue and gross margins in the fourth quarter.

While Micron is expected to report a strong quarter, analysts and investors will be paying close attention to several factors during the earnings call to gauge the company's future trajectory. A key indicator will be Micron's guidance for its November-quarter gross margins. Analysts believe the company will need to forecast at least 48% margins to sustain recent stock gains.

Investors will also be looking for Micron's initial guidance for fiscal year 2026, including its capital expenditure plans. An increase in spending on new fabrication plants could signal further confidence in the long-term demand environment.

Any updates on the sustainability of improved NAND pricing will also be important, as NAND products generally have lower gross margins than DRAM. The sector has historically been cyclical in pricing, but expectations are elevated going into the report.

Despite a significant run-up in its stock price to all-time highs and gains of nearly 100% in 2025, expectations remain bullish on Micron. The company has a history of consistently beating earnings estimates, and its exposure to the expanding AI market gives it a strong growth narrative.

However, the cyclical nature of the memory market and competition from rivals like Samsung and SK Hynix remain potential risks for investors to consider. The options market is pricing in a +/- 10% move in the shares ($16.25).

With an RSI (Relative Strength Index) of 77 as of yesterday’s close, the stock is overbought on a technical level. Since the bar is set so high for Micron, an earnings beat on EPS and top-line revenue may be required and a guidance beat may also be necessary for more upside.

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