Key takeaways
Micron reported quarterly revenue of $54.23 billion, beating the $51 billion Wall Street expected, but the stock fell after the report was released.
Micron’s long-term DRAM contracts went from 16 to 26 in about a month, and Cramer says that ends the company’s boom-and-bust cycle.
At 6.2 times forward earnings, the stock remains valued as that of a cyclical company, which seems too cheap if the contracts hold.
Micron technology (MU:NASDAQ) just posted a quarter that Jim Cramer called “phenomenal,” and the stock still fell.
Cramer set the tone on Thursday’s episode of Mad Money: “Micron brought in $54.23 billion in revenue while Wall Street expected just over $51 billion.” Profit came in at $33.42 per share, compared to $31.61 expected by analysts.
Stocks fell further after Wednesday evening’s report and opened lower on Thursday.
Cramer’s response to the sale was a contract tally: “Micron had 16 long-term contracts to supply DRAM. Now there are 26.”
His conclusion? The end of Micron’s incessant boom-and-bust cycle “has finally arrived.”
That’s an important statement about a company whose actions have always moved with the cycle of memory.
Why do customers want to lock themselves in?
Micron makes memory chips. Its main product is DRAM, the working memory of computers, telephones and servers. It also makes high-bandwidth memory, or HBM, which is stacked DRAM that sits next to AI chips in data centers.
Cramer called HBM’s request “crazy.” (I agree.) The chips are scarce enough that customers will sign strategic agreements to buy from Micron over the next few years, so as not to be left out if the shortage lasts.
(Which seems to be the case so far. I mean, Amazon is raising GPU rental prices again next week!)
A decade of ups and downs
The instinct to start selling when things look rosiest makes sense once you know Micron’s story. Revenue climbed to $30.4 billion in fiscal 2018 and slipped to $21.4 billion in fiscal 2020. It peaked again at $30.8 billion in fiscal 2022, then was cut by about half to $15.5 billion in fiscal 2023…
…before reaching $133 billion in fiscal year 2026. That’s two complete bankruptcies in ten years, and the second cut sales in half in a single year.
Gross margin tells the same story, with larger fluctuations:
It fell from 45.2% in fiscal 2022 to 2.7% in fiscal 2023, when Micron was barely selling its chips for more than they cost to manufacture. In fiscal 2026, it was 80.7%. It’s the record of a company that lives and dies by prices it doesn’t control.
This is what contracts are supposed to address. Cramer said each new project makes Micron “less cyclical and more secular.”
Gn bussni
