Micron: Q4, I Was Wrong, Surging AI Demand Bridges Blackwell Delays (Rating Upgrade)

Summary:

• Micron’s Q4 earnings exceeded expectations, driven by strong AI demand for advanced DRAM and NAND products, despite concerns about Nvidia’s Blackwell chip delays.
• The company’s consistent AI-driven memory demand suggests a shift from cyclical volatility to stable EPS growth, enhancing Micron’s long-term outlook.
• Micron’s forward P/CF ratio indicates a transition from an investment-heavy phase to a harvesting phase, signaling strong future cash flow generation.
• Despite potential AI demand risks, I remain optimistic about Micron’s growth, reverting to a buy rating based on robust Q4 performance and positive guidance.

Investment Thesis

Micron’s (NASDAQ:MU) (NEOE:MU:CA) Q4 earnings this past week saw the memory chipmaker put up stronger-than-expected EPS performance, despite my previous concerns surrounding Nvidia’s Blackwell chip delays.

Earlier forecasts, such as my Q4 preview, emphasized risks

Analyst’s Disclosure: I/we have a beneficial long position in the shares of META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Noah Cox (main account author) is the managing partner of Noah’s Arc Capital Management. His views in this article are not necessarily reflective of the firms. Nothing contained in this note is intended as investment advice. It is solely for informational purposes. Invest at your own risk.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.