Q2 2025 Earnings Summary
- Micron is gaining market share in high-margin areas such as HBM, high-capacity DIMMs, LPDRAM in the data center, data center SSDs, and automotive products, contributing to its competitive advantage.
- The demand for HBM is robust, with Micron's own shipments ahead of forecast; the company expects HBM revenue in 2026 to be significantly higher than in 2025, supported by substantial investments in HBM capacity.
- Micron is the sole supplier of LPDRAM in the data center and will be the first to have volume production of SOCAMM in deep partnership with NVIDIA, enhancing its leadership in AI memory solutions.
- Elevated industry inventory levels are impacting Micron's profitability and may continue to do so, as overall industry inventory levels are still elevated from the severe downturn and have ticked up in the last quarter.
- Underutilization and higher costs in NAND are leading to higher-cost inventories that will impact margins in future quarters, with these costs beginning to pass through in the fourth quarter and into 2026.
- Increasing capital expenditures required to expand HBM capacity may limit Micron's margin upside, as substantial investments are needed to meet growing HBM demand, including adding a second HBM manufacturing facility operational in 2027.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +38% (from $5.824B to $8.053B) | Total Revenue increased by 38% YoY, driven by robust overall sales performance with notable contributions from higher-value segments such as Compute & Networking, reflecting strong market demand and improved pricing. |
Operating Income | +831% (from $191M to $1.773B) | Operating Income surged by 831% YoY due to a turnaround in profitability from improved gross margins, higher revenue from core segments, and better cost management, reversing the low base of the previous period. |
Net Income | +100% (from $793M to $1.583B) | Net Income nearly doubled YoY, benefiting from the significant revenue and operating income improvements, reflecting a strong recovery in profitability compared to the previous period’s performance. |
Gross Margin | +174% (from $1.079B to $2.963B) | Gross Margin improved dramatically by 174% YoY, as a result of enhanced product mix, increased average selling prices, and manufacturing cost reductions, all contributing to a healthier margin profile. |
Compute and Networking | +109% (from $2.185B to $4.564B) | The Compute and Networking segment increased its revenue by 109% YoY, driven by strong DRAM demand, higher average selling prices, and the growing influence of AI and data center applications that boosted bit shipments. |
Storage | +54% (from $905M to $1.392B) | Storage revenue grew by 54% YoY, largely due to record data center SSD revenue, reflecting robust demand for high-performance storage solutions amid increasing AI workloads. |
Mobile | -33% (from $1.598B to $1.068B) | Mobile revenue declined by 33% YoY, primarily because of lower bit shipments and average selling price declines, as resources and output were shifted to meet stronger demand in higher margin segments. |
Basic Earnings per Share | +97% (from $0.72 to $1.42) | Basic EPS improved by 97% YoY, reflecting the turnaround in profitability with higher net income and operating income, which overcame the weaker performance in the previous period. |
Operating Cash Flow | +16% (from $3.405B to $3.942B) | Operating Cash Flow increased by 16% YoY, driven by improved net income and favorable adjustments for non-cash expenses, even though changes in working capital elements tempered the overall increase. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Data Center Revenue | Q3 2025 | no prior guidance | Expected to hit another record in fiscal Q3 2025 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Gross Margin | Q2 2025 | "A 100 basis point decline in gross margin is expected in Q2 2025" | "Gross margin was US$2,963 millionOn US$8,053 million revenue(~36.8%), a ~160 bps decline vs. ~38.4% in Q1 2025" | Missed |
Inventory | Q2 2025 | "Inventory levels are expected to increase in Q2 2025" | "Inventory increased from 8,705In Q1 2025 to 9,007In Q2 2025" | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
HBM | In Q1 2025, executives stressed strong HBM demand with ramped capacity and revenue growth targets ( ); in Q4 2024, they emphasized robust demand driven by AI and noted supply challenges with HBM3E and capital-intensive expansion ( ) | Q2 2025 discussions reinforced strong HBM demand with revenue growth exceeding $1 billion, while detailing ambitious capacity expansion plans (including a new advanced packaging facility in Singapore) and the transition to 12‐high HBM3E, offering improved power efficiency and capacity ( ) | Consistent bullish narrative with an evolving focus on capacity expansion and technological enhancements. |
Data Center Memory Solutions | Q1 2025 highlighted innovations around LPDRAM, LP5 (notably for flagship devices), high-capacity DIMMs, and improving data center SSD market share ( ); Q4 2024 underscored record share gains in high-capacity DIMMs and data center SSDs ( ) | Q2 2025 maintains the emphasis with milestones like over $1 billion in high-capacity DRAM revenue, continued leadership in LPDRAM, and robust SSD performance driven by key customer qualifications ( ) | Steady positive emphasis with consistent improvements and record achievements. |
Advanced DRAM Technologies | Both Q1 2025 and Q4 2024 mentioned the strategic shift toward DDR5 and LP5 products alongside HBM, with a focus on transitioning from older nodes (DDR4/LP4) and managing supply constraints ( ); Q4 2024 also stressed how the 1‑beta node supports this transition ( ) | Q2 2025 continues to underline leadership in advanced nodes with DDR5 and LP5 while pointing out that HBM’s silicon intensity is constraining overall DRAM supply, reinforcing the need for capacity discipline ( ) | A consistent strategic focus that maintains leadership despite ongoing supply constraints. |
High‑Margin Product Mix | Q1 2025 noted a clear shift toward advanced, high‑margin products such as DDR5, HBM, and LP5 to offset lower‐margin segments like NAND ( ); Q4 2024 highlighted gains in high‑margin categories like HBM, high‑capacity DIMMs and data center SSDs ( ) | Q2 2025 reemphasized the shift by targeting higher‑value DRAM and NAND solutions, with a focus on leveraging technological leadership to mitigate margin pressures from lower‑margin products ( ) | Consistent strategy to boost margins by increasing advanced product mix, reinforcing an upbeat sentiment. |
Inventory Management Challenges | Q1 2025 discussed high overall inventory but noted progress in drawdowns and reduced customer stock levels ( ); Q4 2024 mentioned elevated inventory levels with an outlook for improvement in later fiscal periods ( ) | Q2 2025 revealed a Days Inventory Outstanding (DIO) at 158 days—above the target—while outlining a plan to bring it below 120 days by fiscal Q4, with DRAM and NAND dynamics influencing profitability ( ) | Inventory remains a persistent challenge with management expecting gradual improvement. |
NAND Underutilization & Cost Pressures | Q1 2025 addressed how challenging NAND market conditions, including underutilization charges and pricing pressures, were impacting margins ( ); Q4 2024 did not provide details on this topic | Q2 2025 explicitly discussed how NAND underutilization and cost pressures are weighing on gross margins, prompting capacity adjustments and pricing challenges with sequential revenue declines noted ( ) | An increasingly emphasized headwind that introduces a more bearish note compared to its absence in Q4 2024. |
Capital Expenditures for HBM Expansion | Q1 2025 noted that HBM was the largest portion of CapEx, including investments in front‑end fabs and new facilities (e.g., in India) to support capacity needs ( ); Q4 2024 stressed that the majority of fiscal 2025 CapEx was focused on HBM, facility construction, and R&D ( ) | Q2 2025 outlined continued major CapEx investments for HBM expansion—highlighting capacity growth in existing facilities and the groundbreaking of an HBM advanced packaging facility in Singapore, as part of a broader $14 billion CapEx plan ( ) | A steady and strategic investment approach that remains a critical pillar for future growth. |
Competitive Dynamics from China‑Based Suppliers | Q4 2024 included commentary from Sumit Sadana noting competition from China‐based suppliers in lower‑end segments (DDR4, LP4, and low‑end NAND products) ( ); Q1 2025 did not mention this | Q2 2025 did not mention competitive dynamics from China‑based suppliers | De-emphasized in recent discussions, suggesting reduced focus on lower‑end competition. |
Manufacturing Enhancements (Smart Manufacturing & AI) | Q4 2024 highlighted significant investments in smart manufacturing and AI to boost yield, efficiency, and test performance ( ); Q1 2025 did not address this topic | Q2 2025 contained no reference to smart manufacturing or AI‐driven enhancements | A reduced emphasis relative to Q4 2024, indicating a potential shift in focus away from discussing manufacturing innovations. |
Evolving HBM Configurations | Q4 2024 discussed evolving HBM stacks—such as moving from 8‑high to 12‑high configurations and the resulting trade ratio and cost implications ( ); Q1 2025 mentioned the trade ratio of HBM versus conventional DRAM production ( ) | Q2 2025 further detailed the switch to 12‑high HBM3E with benefits like 20% power improvement and 50% higher capacity, underscoring its influence on cost and margin profiles ( ) | Consistent reinforcement of technological evolution that bolsters margins and product performance. |
AI Applications & Strategic Partnerships | Q1 2025 and Q4 2024 earnings calls did not provide commentary on AI applications or collaborations like the SOCAMM project | Q2 2025 introduced a positive narrative on AI‐driven demand across PCs, smartphones, and automotive, alongside a notable strategic partnership with NVIDIA for the SOCAMM platform ( ) | A newly emerging topic in Q2 2025, reflecting growing emphasis on AI as a key demand driver. |
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HBM TAM Increase
Q: Is HBM sales growth unit or content driven? Flexibility to raise TAM further?
A: The HBM Total Addressable Market (TAM) has increased due to a combination of more robust shipments and a faster move to 12-high stacks, which come at a higher ASP because of higher content. The overall demand for HBM remains robust, and Micron's own shipments have been ahead of forecast, contributing to the TAM increase. -
Gross Margins and Costs
Q: Can you quantify start-up cost headwinds in Q4? Do they persist?
A: Start-up costs are relatively modest, under 30–40 basis points effect on gross margins as we exit the year. These costs will increase through fiscal '26 as we ramp up activity, particularly in Idaho and around our newest DRAM node. The higher-cost inventories from previous write-downs have cleared, and current inventories are competitive. However, underutilization in NAND results in higher-cost inventories that will begin to pass through in Q4 and into '26. -
Capital Investment for HBM
Q: Does CapEx need to increase to support HBM growth into fiscal '26?
A: While we are not providing specific CapEx guidance for fiscal '26, the multiyear growth in HBM and customer forecasts require more HBM capacity. We are making substantial investments, including breaking ground on a second HBM manufacturing facility to be operational in 2027, to meet the $100 billion market opportunity by 2030. Investments will primarily focus on assembly and test for HBM, while we remain disciplined in spending on core DRAM wafer manufacturing. -
China Supply Impact
Q: Is supply and pricing risk from China starting to tail off?
A: Supply from Chinese companies has been mostly in DDR4 and LPDDR4 over the past year. As inventories in PCs and smartphones have improved by spring 2025, we see healthier demand dynamics. Our exposure to the affected portions is only about 10% of our revenue. Thus, we are seeing less impact from China supply on advanced products like DDR5. -
Ability to Capture More Market Share
Q: If competitors struggle, can you ramp up supply to capture more share?
A: We are pleased with our progress in providing greater supply than prior plans, helping us achieve our target of reaching natural market share by the end of the calendar year. We are making substantial investments in HBM capacity and remain disciplined in our approach to supply and market opportunities. -
Mix Shift to Higher-Margin Products
Q: How will mix shift to higher-margin products affect operating profit?
A: We are gaining share in high-margin areas like HBM, high-capacity DIMMs, LPDRAM in data centers, and data center SSDs. While these products command a premium and positively impact our business, overall industry profitability is still affected by elevated inventory levels from the downturn, particularly in NAND. As the industry environment improves and inventory levels reduce, we expect a better operating profit trajectory. -
Enterprise SSD Market Outlook
Q: Are data center NAND shipments improving sequentially?
A: In calendar Q2, much of the inventory overhang in data center SSDs is expected to deplete, with run rates picking up as AI server growth continues. We expect data center SSD TAM to start improving sequentially, and we anticipate our data center revenue to hit another record in fiscal Q3. -
Shift from HDDs to SSDs
Q: Are you seeing faster uptake of QLC SSDs in AI servers?
A: Yes, there's a clear move to higher-capacity SSDs in AI servers, with a focus on QLC-based solutions. Large hyperscalers are seeking to reduce HDD usage due to challenges with reliability and power consumption. The shift towards NAND provides density, power savings, and TCO benefits, and we expect this trend to have a snowball effect in deployments. -
DRAM Cost Projections
Q: Is DRAM cost projection now flat due to HBM?
A: Yes, inclusive of HBM, we now expect all-in DRAM costs to be more or less flat this year, rather than the previously expected mid- to high single-digit cost reductions. -
LPDDR5X and SOCAMM Transition
Q: Will you maintain strong share with SOCAMM? Is there ASP uplift?
A: While we can't comment on ASP differences, we remain the only company shipping LPDRAM in volume and will be the first to have volume production of SOCAMM, working closely with NVIDIA. The SOCAMM opportunity is significant, and we maintain a sizable lead in time, shipments, and experience in LPDRAM for data centers.
Research analysts covering MICRON TECHNOLOGY.