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Investing.com -- Micron Technology Inc (NASDAQ:MU) reported better-than-expected second-quarter earnings driven by strong demand for its chips from data center and consumer markets. Guidance for the third quarter was mixed, with revenue outlook exceeding expectations, while earnings and gross margin (GM) forecasts fell short.
The company’s shares jumped more than 6% initially in extended trading but lost most of these gains in Friday’s premarket. The stock was flat as of 08:30 GMT.
The memory chipmaker posted Q2 earnings per share of $1.56, beating analysts’ estimates of $1.44.
“Micron delivered fiscal Q2 EPS above guidance and data center revenue tripled from a year ago,” said Sanjay Mehrotra, Chairman, President, and CEO.
“We expect record quarterly revenue in fiscal Q3, with DRAM and NAND demand growth in both data center and consumer-oriented markets, and we are on track for record revenue and significantly improved profitability in fiscal 2025.”
Revenue rose to $8.05 billion, surpassing the consensus forecast of $7.91 billion.
Micron expects earnings of $1.47 to $1.67 per share, for the third quarter which is below the consensus estimate of $1.79.
However, the company guided Q3 revenue in the range of $8.6 billion to $9 billion, ahead of analysts’ expectations of $8.48 billion.
The company expects a gross margin of 36.5%, down 200 basis points quarter-on-quarter, and missing the Street consensus of 38.7%.
Despite mixed guidance, Morgan Stanley (NYSE:MS) analysts retain an overall bullish view on Micron.
"We continue to see this as a compelling AI story especially given very strong recent execution, and a somewhat less compelling commodity memory story - and with recent pressure in AI multiples we have places where our conviction is higher," they said in a post-earnings note.
Similarly, with the stock trading at 7.6x their 2026 EPS estimate of $13.64, and showing support at the $90 level, Wolfe Research analysts think the risk-reward profile in Micron shares "is quite favorable, keeping MU as our favorite idea in the space."
Pratyush Thakur contributed to this report.