Micron (NASDAQ:MU) Posts Better-Than-Expected Sales In Q3 But Quarterly Revenue Guidance Misses Expectations

Memory chips maker Micron (NYSE:MU) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 46% year on year to $11.32 billion. On the other hand, next quarter’s revenue guidance of $2 billion was less impressive, coming in 83.3% below analysts’ estimates. Its non-GAAP profit of $3.03 per share was 5.9% above analysts’ consensus estimates.

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“Micron closed out a record-breaking fiscal year with exceptional Q4 performance, underscoring our leadership in technology, products, and operational execution,” 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.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Micron’s sales grew at a solid 11.8% compounded annual growth rate over the last five years. Its growth beat the average semiconductor company and shows its offerings resonate with customers, a helpful starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Micron’s annualized revenue growth of 55.1% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Micron reported magnificent year-on-year revenue growth of 46%, and its $11.32 billion of revenue beat Wall Street’s estimates by 1.8%. Beyond the beat, this marks 8 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 77% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 35.4% over the next 12 months, a deceleration versus the last two years. Still, this projection is eye-popping given its scale and indicates the market sees success for its products and services.

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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 121, which is 26 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.

Key Takeaways from Micron’s Q3 Results

We were impressed by Micron’s strong improvement in inventory levels. We were also glad its revenue and adjusted operating income both outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed, but this was offset by better-than-expected EPS guidance for the same period. Overall, this print had some key positives. The stock traded up 3.1% to $171.62 immediately following the results.

Indeed, Micron had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.