4 Blowout Numbers From Micron's Earnings Investors Need To See

Micron (MU 1.32%) did it again.

The memory chip superstar blew past results in its third-quarter earnings report, sending the stock up 15% after hours on Wednesday as the company both smashed third-quarter expectations and gave much better guidance than expected.

The results showed that the AI boom isn't slowing down and that memory shortages are expected to persist at least through 2028. Management said it was in the early innings of significant innovation and productivity improvements, and that the memory industry has been structurally transformed by AI.

Let's take a look at a few of the big numbers from the earnings report that show how the memory shortage is driving blockbuster results for Micron.

Micron reported 346% revenue growth in the quarter to $41.5 billion, and its year-over-year revenue growth accelerated again.

Micron's guidance called for similar growth in the fourth quarter, with revenue expected to reach $50 billion. That growth is being driven by soaring prices in the memory market as unit sales in the key data center are only expected to grow by the high teens. Meanwhile, unit volumes are falling in the PC and smartphone market.

Micron's gross margin came in at 84.6% in the quarter, ahead of its own guidance at 81%, and topping even Nvidia, which has hovered around 75%. At that level of gross margin, Micron is selling its chips for roughly six times their direct costs, making the company almost impossibly profitable.

Though management guided to a gross margin of 86%, it will be difficult for the company to improve on that number, and it's likely to plateau soon. That also means that its profit growth will start to slow as well.

80.4% was Micron's operating margin in the quarter, again showing the company delivering windfall profits. Almost no company in the world can generate an operating margin that wide.

In addition to the impact of high prices, the operating margin also shows that the company is being disciplined with its spending.

4. $28.2 billion

Micron produced $28.2 billion in net income, making it one of the most profitable companies in the world based on the bottom line.

Better yet, the company expects to top $40 billion in the fourth quarter, giving the company run rate profit of $160 billion.

Micron just introduced strategic customer agreements (SCA), longer-term contracts that typically last five years, to alleviate some of the cyclical risk facing the company.

What it means for investors

Micron is too big to repeat the feat it's accomplished over the year, with the stock jumping nearly 1,000%, but it can still deliver meaningful gains if it continues to execute.

Wednesday's report was virtually flawless. It's not a surprise to see the stock up double digits again.