Goldman Stays Neutral as Micron's Boom Raises Supply Concerns

Micron Technology (MU.US) has posted impressive fiscal Q4 revenue numbers, exceeding analyst estimates. The company's quarterly revenue reached $54.23 billion, a 379% year-over-year increase and well above Goldman Sachs' estimate of $51.91 billion.

The non-GAAP earnings per share came in at $33.42, also surpassing expectations. Looking ahead to the next quarter, Micron provided guidance for revenue of $61.5 billion at the midpoint, exceeding Street estimates of $57.57 billion.

One key factor contributing to Micron's success is its long-term customer contracts. The company now has 26 such agreements in place, typically lasting five years with floor pricing and backed by customer deposits totaling $32 billion, up from $22 billion previously.

This represents a significant increase in committed revenue, locking in around $150 billion through 2030, which covers over 35% of Micron's expected revenue during that period. Despite this, Goldman Sachs has maintained its Neutral rating on the stock despite raising its price target to $1,250 from $1,100.

The reasoning behind Goldman's cautious stance lies in their expectation of supply catching up with demand as early as 2028. Micron is accelerating its capital expenditure (capex) towards $55 billion in fiscal 2027 to bring new capacity online in Idaho (2027), Singapore (2028), and Hiroshima (late 2028).