What Happened?
Shares of memory chips maker Micron (NYSE:MU) jumped 8.4% in the afternoon session as markets experienced a boost after data from the Bureau of Labor Statistics revealed that inflation for the month of February 2025 came in better than expected. The CPI rose 0.2% from the previous month (vs estimates for a 0.3% increase), while headline inflation rose 2.8% year on year (vs estimates for a 2.9% y/y increase). The data revealed inflation continued to edge closer to the Fed's 2% target, but not quite there yet. The reaction wasn't anything wild, but the sentiment leaned positive. The Nasdaq led the way, climbing 1.4%, boosting some tech stocks.
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What The Market Is Telling Us
Micron’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 18.4% on the news that the company reported strong first-quarter results with revenue and EPS outperforming Wall Street's estimates.
The top line outperformance was broad-based across business lines and product types. Notably, Micron called out strong AI server demand amid a more favorable operating environment.
On the other hand, its inventory levels increased. Looking ahead, its revenue, gross margin, and EPS guidance of $6.6 billion, 25.5%, and $0.17 per share for the next quarter crushed analysts' projections.
During the earnings release, the company declared a quarterly dividend of $0.115 per share. Following the results, there was a palpable uplift in sentiments by Wall Street analysts. Notably, Argus Research upgraded the stock's rating from Hold to Buy, citing "rising memory prices, a broad recovery in demand, and the AI-driven demand surge in [the] data center." Overall, this was a fantastic quarter.
Micron is up 9.3% since the beginning of the year, but at $95.48 per share, it is still trading 37.8% below its 52-week high of $153.45 from June 2024. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $2,460.
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