Micron shows early signs of recovery with revenue growing 15.7% QoQ to $4.73B, though still down 40% YoY, as AI server demand offsets PC/mobile weakness. Gross margins improved to -2.4% from -10.2% last quarter, reflecting aggressive cost optimization and improving pricing power. High-bandwidth memory (HBM) orders for AI accelerators represent a major growth catalyst, with $1B+ in advance payments secured. Management expects return to profitability by mid-2024, driven by AI datacenter build-out and stabilizing memory prices.
Key Risks
Overcapacity risk if PC/mobile recovery lags expectations
Chinese memory makers advancing capabilities though still trailing
Customer concentration increasing with cloud providers
High capex requirements strain cash flow during transition
Key Opportunities
HBM for AI accelerators represents $3B+ revenue opportunity in FY24
DDR5 server transition drives ASP improvements and share gains
Operational leverage significant when profitability returns
Bottom Line
Micron's Q4 results demonstrate early stages of recovery in memory markets, led by AI infrastructure demand and improving supply/demand balance. While traditional segments remain challenged, strategic positioning for AI-driven growth through HBM and advanced nodes provides clear path to restored profitability. Management's operational execution during downturn strengthens competitive position for upturn. Key metrics to watch include HBM qualification progress, DDR5 adoption rates, and sustained ASP improvements. The transformation toward higher-value AI/datacenter applications could drive structural improvement in long-term profitability profile.