Stifel says Micron Technology’s fast growth may slow down soon. However, the firm believes this isn’t bad for shareholders because steady high prices and strong profit margins could offset slower growth.
Micron’s shares went up 1.6% on Monday morning as investors and analysts started focusing on the company’s fourth-quarter earnings report, which is expected on September 30.
Stifel expects Micron to report results and guidance that beat average forecasts, but the firm thinks the gains will be more modest than in recent quarters.
The main challenge is supply. Micron and other companies cannot deliver memory chips quickly enough to meet demand. Stifel predicts DRAM shipment growth will slow to 15% to 20% in 2027, compared to growth in the mid-to-high 20% range this year. The firm expects Micron to report $50.78 billion in revenue for the current quarter, a 22% increase from the previous quarter, but growth is likely to slow to about 11% next quarter.
Supply limits may slow Micron’s shipment growth, but these limits could also keep prices and profits high. Stifel says DRAM shipments would have to increase by 40% to 50% in 2027 just to meet current demand.
The firm believes Micron’s stock still does not fully reflect the strong demand for memory compared to limited supply. This situation is likely to keep prices and profit margins high for the next 12 to 18 months or more. Stifel remains positive on the stock.
