More importantly, Micron is expecting fiscal 2025 Q1 revenue of $8.7 billion at the midpoint of its guidance range. That would be a jump of 84% from the same quarter last year. The memory specialist has guided for non-GAAP earnings of $1.74 per share for the current quarter, up substantially from the loss of $0.95 per share it suffered in the same quarter last year.

The good part is that its top and bottom lines are expected to jump substantially in both fiscal 2025 and fiscal 2026 (see chart below).

It won’t be surprising to see Micron deliver such impressive growth thanks to the health of the memory market. However, there is a good chance it could end up exceeding analysts’ expectations.

Micron management remarked on the latest earnings conference call that it is “making investments to support artificial intelligence (AI)-driven demand, and our manufacturing network is well positioned to execute on these opportunities.” The company has guided for capital expenditures of $3.5 billion for the first quarter of fiscal 2025, which would be a big leap over the $1.7 billion capex it reported in the year-ago period.

Micron is doing the right thing by increasing its capex, as the company says that it has sold out its entire HBM production capacity for 2024 and 2025. The addressable opportunity in the HBM market is expected to grow from $4 billion in 2023 to $25 billion next year, per Micron’s estimates. So an increase in capital spending should allow Micron to shore up its production capacity and fulfill more demand, which could lead to a stronger-than-expected performance from the company.

Micron stock has been subject to some volatility this year, but it has still clocked respectable gains of 30%, as compared to the PHLX Semiconductor Sector index’s 25% jump. The stock, however, has gained impressive momentum since it reported its quarterly results on Sept. 25. There is a strong likelihood that it will be able to sustain this bull run in 2025 and beyond, thanks to the favorable dynamics in the memory market, as discussed.

We have already seen in the chart that Micron’s earnings could hit $8.91 per share in the current fiscal year before jumping to $12.80 per share in fiscal 2026. Assuming Micron does generate $12.80 per share in annual earnings after a couple of years and trades at 30 times forward earnings at that time, in line with the Nasdaq-100 index’s forward earnings multiple (using the index as a proxy for tech stocks), its stock price could hit $384.

That would be a big increase from Micron’s current stock price of around $109, suggesting that this chip stock could deliver outstanding gains over the next two years. Given that Micron is trading at just 12.5 times earnings right now, investors are getting a good deal on this tech stock that seems set to skyrocket going forward.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Semiconductor Sales Could Keep Soaring in 2025: 1 Top Stock to Buy Hand Over Fist Before That Happens was originally published by The Motley Fool