DRAM Demand Powers Micron Technology's Growth: Will the Momentum Last?

Micron Technology's MU Dynamic Access Random Memory (DRAM) revenues grew 51% year over year in the third quarter of fiscal 2025 to $7.1 billion. The DRAM segment, which accounted for a whopping 76% of the company’s top line, is getting propelled by the traction in data center, automotive, PC and mobile end market growth. 

Micron Technology’s DRAM segment is led by its products like low-power server DRAM and high bandwidth memory (HBM) chips, which are experiencing a massive surge in use cases in Artificial Intelligence (AI) workloads due to their higher capacity and low power consumption. Additionally, Micron Technology experienced a sequential surge of 50% in HBM revenues, which drove DRAM revenues to a record high in the third quarter of fiscal 2025.

The company highlighted robust momentum in the automotive end market, where advanced driver assistance systems and AI-powered in-vehicle infotainment systems are pushing higher memory and storage content growth. In the mobile end market, Micron Technology is benefiting from the growing demand for AI features, which is driving higher DRAM content growth for smartphones.

The company expects industry DRAM bit demand to grow in the high-teens percentage range in calendar 2025. Additionally, low inventory levels in distribution channels are expected to support pricing and margins going forward. This demonstrates that Micron’s DRAM business is set to benefit from higher-value product shipments and tight supply in leading-edge nodes.

The Zacks Consensus Estimate for fiscal 2025 DRAM revenues is pegged at $27.95 billion, indicating year-over-year growth of 58.8%. The consensus mark for fiscal 2025 signifies total revenues to grow 46.5% to $36.79 billion.

How Competitors Fare Against Micron

Micron Technology competes with Western Digital Corporation WDC and Seagate Technology Holdings plc STX in the data storage market.

Micron Technology competes with Western Digital in the NAND market. Western Digital is a diversified storage company with a broader portfolio that includes both traditional hard disk drives (HDDs) and NAND-based solid-state drives (SSDs).

Seagate is a major force in the HDD market, particularly for high-capacity storage solutions for data centers and cloud infrastructure. Seagate is also developing its presence in the SSD market through portfolio expansion and partnerships.

Micron’s Price Performance, Valuation and Estimates

Shares of MU have gained 38.2% year to date compared with the Zacks Computer - Integrated Systems industry’s growth of 29.3%.

MU YTD Price Performance

From a valuation standpoint, MU trades at a forward price-to-sales ratio of 2.75X, lower than the industry’s average of 3.92X.

MU Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for MU’s fiscal 2025 earnings implies year-over-year growth of 497.7%, while the 2026 earnings estimate implies growth of 57.9%. The earnings estimates for fiscal 2025 and 2026 have been revised upward in the past 30 days and seven days, respectively. 

MU currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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