Should You Buy, Hold, or Sell Micron Stock Before Fiscal Q3 Earnings?

Micron Technology, Inc. MU will report fiscal third-quarter earnings after the closing bell on Wednesday. With its strong performance in the S&P 500 this month, a notable increase in both revenues and profits in the upcoming report could boost its stock price. So, should investors buy Micron stock pre-earnings or await clarity on margins? Let’s explore –  

What to Expect From Micron’s Fiscal Q3 Earnings?

Micron is expected to report earnings per share (EPS) of $1.59 in the fiscal third quarter, a substantial increase from $0.62 in the same quarter last year, representing a year-over-year jump of 156.5%. Strong demand for Micron’s products in high-value segments, coupled with improved pricing conditions, is expected to drive the company’s earnings.  

Revenues are estimated to reach $8.84 billion in the fiscal third quarter, up 29.7% from last year’s sales of $6.81 billion. It’s also more than the fiscal second quarter’s sales of $8.05 billion. Sequentially rising sales indicate increased demand in memory markets, especially those driven by artificial intelligence (AI).  

Additionally, Micron’s 10.7% average positive earnings surprise over the past four quarters indicates a strong likelihood of meeting its fiscal third-quarter results and boosting its stock price. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

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Reasons to Be Bullish on Micron Stock

With the rise of AI, the demand for graphics processing units (GPUs) has grown because they can handle multiple tasks more efficiently. Now, GPUs require data storage memory, with Micron’s HBM3E leading the industry. 

NVIDIA Corporation NVDA, therefore, has selected Micron’s HBM for its upcoming GB200 and GB300 Blackwell systems. Additionally, other chipmakers like Broadcom Inc. AVGO and Marvell Technology, Inc. MRVL are working on integrating HBM into their platforms, suggesting potential growth for Micron. 

Micron expects the data center HBM market to grow to $35 billion this year, reaching $100 billion by 2030. The company confirmed that it has sold out its entire HBM capacity for this year and is negotiating new contracts for next year. The high demand for HBM has allowed Micron to increase its pricing by 11% in 2025. 

The rise in HBM demand and prices positions Micron for strong earnings both in the upcoming report and in the future. Micron also stands to benefit from the growing demand for DRAM in AI smartphones and PCs. 

Here’s How to Trade Micron Ahead of Fiscal Q3 Earnings 

Strong earnings expectations from high demand for HBM products will boost Micron’s stock price. The projected rise in NVIDIA’s AI chip sales due to Micron’s HBM3E in their GPUs will further benefit its business and stock value. Micron also plans to increase market share against Samsung, as the latter faces challenges passing NVIDIA’s qualification test with HBM3E memory chips, compared to Micron’s improving HBM-chip yields. 

Stakeholders should, thus, hold Micron stock for long-term positive returns. Brokers, too, are somewhat positive about Micron’s prospects, increasing the average short-term price target for MU to $127.07 (up 2.8%) from $123.60. The highest target is $172, indicating a potential 39.2% upside.

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However, investors should be cautious about Micron’s declining gross margin; it fell from 39.5% in the first quarter to 37.9% in the second, with a forecast of 36.5% for the third quarter. 

Despite revenue growth, margin compression occurs due to intense price competition counteracting the benefits from increased volumes and better market scenarios. Hence, new entrants should delay betting on Micron stock until after the fiscal third-quarter results for clarity on revenue growth and margin pressures. 

For now, Micron has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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

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