Micron: What Was That About A Banner Year In 2024?

Micron's CEO calls for 2024 to be a banner year for AI and memory, but does the data and financials support that?

Photo by Andrew Neel on Unsplash

This far into the memory trough, if you've followed Micron MU 0.00%↑for more than five minutes, you know the company is in one of the worst financial seasons in its history. And I specify financial because the company is not in the worst position it has been in its history as a whole. The past few quarterly reports have shown record negative earnings and the hallmarks of the worst downturn in DRAM and NAND memory history. Yet, the company is leading the market in most technology in terms of nodes, layers, and manufacturing expertise. So, it doesn't entirely surprise me to hear CEO Sanjay Mehrotra say:

...we consider 2024 to be a big banner year for AI, for memory and storage. And Micron will be well positioned to capture this with our strong portfolio of products from D5 to LP5 to HBM to high-density modules, even including graphics.

But much of what investors and analysts feel right now is the continual letdown of management's narrative. The narrative of "things will get better" or "things are getting better" is met with disappointment in growth or overall financial performance. So to be as objective as possible, I'll go through the good and bad financially to find if it aligns with the narrative.

Basically, I want to answer, does the narrative have any basis in reality, or is it just a bunch of hopeful spewing, as in, eventually, it will get better, but never today?

I'll start with the bad and the comparisons and then get to the banner.

The bad is summed up in the earnings headlines: negative revenue growth, negative margins, negative earnings. The company reported FQ3 revenue of $3.75B, down 56.6% year-over-year. This is sequentially higher than the $3.69B reported in FQ2 but lower yearly growth than FQ2's negative 52.6% growth. Gross margins continued to run negative at -16.1%.

Revenue is the single most important metric since there isn't any crunching of numbers like gross margins, as product mix, write-downs, or other financial events can shift the numbers below the revenue line. So to find out how bad bad is, I start with revenue and the two growth periods.