MU's Embedded Business Grows 20%: Is AI in Industrial Gaining Steam?

Micron Technology’s MU Embedded Business Unit saw strong growth in the third quarter of fiscal 2025. The business unit’s revenues were up 20% sequentially to $1.2 billion. The company attributes this strong growth to higher demand in both industrial and consumer embedded markets.

A key reason for the growth in revenues is that more industrial customers are investing in artificial intelligence (AI), especially in key areas like factory automation. Notably, Micron is witnessing a resumption of growth in the industrial market as customers are ramping up their investment in AI-related applications.

During the third quarter, Micron also benefited from the constrained supply of memory chips, such as D4 and LP4, and low inventory levels in the distribution channels. Additionally, AI adoption is accelerating in auto and industrial end-markets. Micron is seeing momentum in its automotive market, where the company achieved production readiness for its dual-channel LP5 DRAM, which is designed to power AI-enabled features in next-generation vehicles.

To build on this momentum and deepen customer engagement, Micron completed a strategic reorganization of its business units in June 2025. This reorganization will allow the company to channel more resources into AI-growth opportunities across its portfolio. This signals just how central AI has become to Micron’s long-term growth strategy. All of these factors seem to be in favor of Micron and with AI adoption growing fast, its Embedded Business appears well-positioned to benefit from this trend.

How Competitors Fare Against Micron

Texas Instruments TXN and NXP Semiconductors NXPI are also benefiting from rising AI adoption in industrial and automotive markets.

Texas Instruments reported a broad recovery in its industrial segment during the first quarter of 2025. Texas Instruments reported that the industrial market increased in upper-single digits, after seven consecutive quarters of sequential decline. Texas Instruments also highlighted that automotive revenue increased sequentially in low single digits.

NXP Semiconductors, in its first quarter of 2025, reported that the inflection point has been reached in the industrial and Internet of Things markets. The company also announced the acquisition of Kinara, an industry leader specializing in neural processors. NXP Semiconductors stated that the move would expand its ability to deliver AI-powered edge-based systems, particularly across factory automation, energy management, healthcare, and smart home end markets.

Micron’s Price Performance, Valuation and Estimates

Shares of MU have gained 43.8% year to date compared with the Zacks Computer - Integrated Systems industry’s growth of 29.3%.

MU YTD Price Performance

From a valuation standpoint, Micron trades at a forward price-to-sales ratio of 2.89X, lower than the industry’s average of 3.91X.

MU Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for Micron’s fiscal 2025 earnings implies year-over-year growth of 497.69%, while the 2026 earnings estimate implies growth of 57.36%. The estimates for fiscal 2025 earnings and fiscal 2026 have both been revised upward in the past 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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