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MICRON TECHNOLOGY INC (MU)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $8.05B and non-GAAP EPS was $1.56, both above Wall Street consensus; gross margin compressed sequentially on heavier consumer NAND mix and pricing . EPS beat vs S&P Global consensus of $1.42 and revenue beat vs $7.89B*.
  • Data center strength continued: HBM revenue crossed $1B and data center DRAM set a record; Micron expects record quarterly revenue in Q3 with DRAM and NAND demand growth across data center and consumer markets .
  • Q3 2025 guidance: revenue $8.80B ±$200M, non-GAAP GM 36.5% ±100bps, non-GAAP OpEx ~$1.13B, non-GAAP EPS $1.57 ±$0.10, implying continued elevated mix of high-value products despite near-term margin headwinds from NAND underutilization .
  • Strategic catalysts: rapid shift to HBM3E 12-high in 2H CY25, SOCAMM LPDDR5X module leadership with NVIDIA Blackwell, and first 1-gamma DRAM node with EUV; management reiterated confidence in record FY25 revenue and improved profitability .

What Went Well and What Went Wrong

  • What Went Well
    • HBM milestone and data center momentum: “HBM revenue grew more than 50% sequentially to a new milestone of over $1,000,000,000… data center DRAM revenue reached a new record” .
    • Technology leadership: launched 1‑gamma DRAM (first Micron EUV DRAM node) with 20% lower power, 15% better performance, >30% bit density vs 1‑beta ; SOCAMM LPDDR5X co-developed with NVIDIA for GB300 platform .
    • Raised HBM TAM and qualification breadth: HBM3E 12‑high designed into NVIDIA GB300, with majority of 2H CY25 HBM shipments expected to be 12‑high; multi‑billion FY25 HBM revenue expected .
  • What Went Wrong
    • Sequential margin pressure: non-GAAP gross margin fell ~160 bps QoQ on consumer-oriented NAND mix and pricing; NAND revenue down 17% QoQ, prices declined high teens % .
    • NAND underutilization weighs on margins; more under-absorption costs will flush through inventories into Q4 and into FY26 .
    • Consumer inventory digestion and pricing: recent consumer DRAM/NAND pricing softness; China legacy DRAM (DDR4/LP4) supply concentrated at lower-end impacted mix; LP4/D4 remain ~10% of revenue in FY25 and will become smaller over time .

Financial Results

MetricQ2 2024Q1 2025Q2 2025 ActualQ2 2025 Consensus
Revenue ($USD Billions)$5.82 $8.71 $8.05 $7.89*
GAAP Diluted EPS ($USD)$0.71 $1.67 $1.41 —
Non-GAAP Diluted EPS ($USD)$0.42 $1.79 $1.56 $1.42*
Non-GAAP Gross Margin (%)20.0% 39.5% 37.9% —
Non-GAAP Operating Margin (%)3.5% 27.5% 24.9% —

Values with asterisk (*) retrieved from S&P Global.

Segment and product breakdown (Q2 2025):

Segment / ProductRevenue ($USD Billions)Seq. Change QoQ
DRAM$6.1 −4% (bits down high-single-digit, price up mid-single-digit)
NAND$1.9 −17% (bits modestly higher, price down high-teens)
Compute & Networking (CMBU)$4.6 +4% (third consecutive record; >50% seq. increase in HBM revenue)
Storage (SBU)$1.4 −20% (data center storage digestion; industry NAND pricing)
Mobile (MBU)$1.1 −30% (inventory normalization)
Embedded (EBU)$1.0 −3% (auto inventory improvement initiatives)

Key KPIs (Q2 2025):

KPIValue
Operating Cash Flow$3.94B
Net Capex (Investments in capex, net)$3.09B
Adjusted Free Cash Flow$857M
Cash, Marketable Investments, Restricted Cash$9.60B
Inventory Days158 days
Dividend$0.115 per share declared, payable Apr 15, 2025
Adjusted EBITDA / Margin$4.1B; 50.7%
HBM Revenue Milestone>$1.0B in the quarter
Data Center DRAMRecord quarter

Guidance Changes

Q2 2025 prior guidance vs actual:

MetricPeriodPrevious GuidanceCurrent ResultChange
RevenueQ2 2025$7.90B ± $200M $8.05B Beat
Non-GAAP Gross MarginQ2 202538.5% ± 1.0% 37.9% Lower
Non-GAAP OpExQ2 2025~$1.10B ± $15M $1.046B Better
Non-GAAP EPSQ2 2025$1.43 ± $0.10 $1.56 Beat

Current guidance (Q3 2025):

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025N/A$8.80B ± $200M New
GAAP Gross MarginQ3 2025N/A35.5% ± 1.0% New
Non-GAAP Gross MarginQ3 2025N/A36.5% ± 1.0% New
GAAP OpExQ3 2025N/A$1.27B ± $15M New
Non-GAAP OpExQ3 2025N/A$1.13B ± $15M New
GAAP EPSQ3 2025N/A$1.37 ± $0.10 New
Non-GAAP EPSQ3 2025N/A$1.57 ± $0.10 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI memory demand & HBM TAMEntered FY25 with best competitive positioning; record DC SSD revenue >$1B; guided record Q1 revenue . Raised HBM TAM to >$35B CY25; sold out CY25 HBM capacity .HBM revenue >$1B; majority 2H CY25 shipments shift to 12-high; multi-billion FY25 HBM revenue; HBM3E 12H in NVIDIA GB300 .Up
LPDDR5X SOCAMM for data centerN/A in Q4 release; began highlighting LP leadership and sampling D5 to PC clients .“World’s first and only” LPDDR5X SOCAMM shipping; co-developed with NVIDIA GB300; LP in data center lowers memory power by >2/3 vs D5 .Up
Gross margin trajectoryQ4 margins improved materially vs trough; Q1 guided Q2 GM ~38.5% non-GAAP .Q2 non-GAAP GM 37.9% on consumer mix/pricing; expect Q3 GM down sequentially, then “up somewhat” in Q4 despite NAND underutilization costs flushing through .Mixed
NAND supply disciplineEmphasized underutilization and time-between-nodes; structural −10% wafer capacity exiting FY25 vs FY24 .Continued underutilization; more costs through inventories in Q4/FY26; aim to take price action and maintain discipline .Improving discipline
China legacy DRAM/NAND dynamicsN/A in Q4; noted consumer weakness near-term in Q1 .Recent pricing impact concentrated in DDR4/LP4 from China; DDR5 overlap limited; LP4/D4 ~10% of revenue for remainder of FY25 .Stabilizing tail risk
1‑gamma DRAM node / EUVFY25 record revenue outlook; strong tech roadmap .1‑gamma launched; 20% power, 15% perf, >30% density vs 1‑beta; supports DC and client roadmaps .Up

Management Commentary

  • “Micron is in the best competitive position in our history… In fiscal Q2, data center DRAM revenue reached a new record. HBM revenue grew more than 50% sequentially to… over $1,000,000,000 of quarterly revenue.” — Sanjay Mehrotra (CEO) .
  • “Micron’s one gamma is our first DRAM node incorporating EUV… 20% lower power, 15% better performance and over 30% improvement in bit density compared to our one beta DRAM.” — Sanjay Mehrotra .
  • “We see strong demand for HBM and have once again increased our HBM TAM estimate for calendar 2025 to over $35,000,000,000… Micron’s HBM3e 12-high is designed into the GB300.” — Sanjay Mehrotra .
  • “We expect revenue to be $8,800,000,000 ± $200,000,000… non-GAAP gross margin 36.5% ± 100 bps… non-GAAP EPS $1.57 ± $0.10.” — Mark Murphy (CFO) .
  • “LP DRAM in a SOCAMM form factor enables easier server manufacturability and serviceability… helps drive broader LP adoption in the server market.” — Sanjay Mehrotra .

Q&A Highlights

  • HBM TAM raised again; drivers include faster move to 12-high and higher ASP/content; majority of 2H CY25 HBM volume expected 12-high .
  • Gross margin headwinds quantified: startup costs modest initially (<30–40bps exiting year) grow through FY26; NAND underutilization costs pass through inventories in Q4 and into FY26 .
  • DRAM costs: “all‑in DRAM costs… flattish” for FY25 (inclusive of HBM), clarifying prior mid-to-high-single-digit front-end cost-down commentary .
  • LPDDR5X SOCAMM leadership: first to volume; deep partnership with NVIDIA; LP in data center reached >$1B milestone combined with high-capacity DIMMs .
  • Consumer legacy dynamics: China DDR4/LP4 supply impacted recent pricing; DDR5 overlap limited; inventories healthier by spring, smartphone orders bounced back with rising DRAM capacities (8→12GB) .

Estimates Context

  • Q2 2025 results vs S&P Global consensus: Revenue $8.05B vs $7.89B* (beat), Non-GAAP EPS $1.56 vs $1.42* (beat), with 24–25 estimates contributing to consensus*. Sequential revenue down 8% on mix/pricing headwinds, but EPS beat reflects high-value DRAM mix and OpEx discipline .
  • Q3 2025: Company guides $8.8B revenue and $1.57 non-GAAP EPS; prior consensus stood at $8.83B and $1.59*, suggesting broadly in-line top-line and EPS guide at the time*, with mix/tax assumptions and NAND pricing likely focus points for estimate revisions .

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Strong data center DRAM/HBM mix offsets consumer pricing softness; expect sequential GM dip in Q3 and rebound “somewhat” in Q4 as mix improves despite NAND underutilization cost flush. Position long-biased on HBM ramp trajectory into 2H CY25 and FY26 .
  • Medium-term: HBM3E 12‑high becoming majority of 2H CY25 shipments with NVIDIA GB300 design-ins; HBM4 volume in CY26 provides multi-year content and TAM expansion .
  • Structural discipline: NAND underutilization and delayed node transitions, plus −10% structural wafer capacity exiting FY25 vs FY24, should support price/margin normalization; watch for pricing actions in CQ2 and CQ3 .
  • Cost dynamics: All-in DRAM costs flattish FY25; startup costs for Idaho DRAM and 1‑gamma ramp rise into FY26—model incremental GM headwinds vs mix tailwinds .
  • LPDDR5X SOCAMM: First-mover advantage; LP in data center lowers memory power by >2/3 vs D5—expect broader adoption alongside GB300 deployments and potential ASP uplift vs soldered solutions .
  • Balance sheet optionality: $9.6B liquidity (cash/investments) and extended debt maturities support capex for HBM packaging expansion (Singapore, Taiwan test) and Idaho DRAM fab ramp toward FY27 output .
  • Estimate implications: Raise EPS and revenue for data center mix and HBM ramp; temper near-term GM for NAND underutilization; Q3 guide broadly in-line—key swing factors are NAND pricing trajectory, consumer mix, and tax rate .