Micron Beats Estimates as AI Data Center Revenue Surges | Closing Bell

Comprehensive cross-platform coverage of the U.S. market close on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Emily Graffeo, Christina Ruffini and David Gura.

And right now we are two minutes away from the end of the trading day. Romain Bostick here with Emily Grafe. We're taking you through to that closing bell. It's a global simulcast. We're joined now by David Gura and Christina Raffini in today for Carol Masser and Tim Stenovec, who knows where they are. Welcome to our audiences across all of our Bloomberg platforms, television, radio, our partnership with YouTube, here on the final trading day of a sloppy September that I think a lot of people would like to forget.

Yeah, and we're seeing the last day, traders actually taking some risk off the S&P 500 moving negative just as we hit that closing bell.

What is David doing? You know you have to stay in the shot, David.

I'm so sorry. I unplugged my cable, Romain. I missed your

I hope no one was making fun of me.

It's like this guy, he spent his whole career working in, you know, media. figured out how

I know. Sorry. It's I don't have Tim's finesse. I'm back. Don't worry about me, please.

I love this. Please give him a more of a hard time. This is this is I'm really enjoying this.

He never he never does. I'm here.

All right. Well, you know, guys, we're going to get Micron earnings in just a few minutes here. And obviously, this is kind of a once again, another test here for the appetite for the AI trade.

Yes, a huge we've been talking about this over the course of the afternoon here. We've been you know, there's this anxiety centering around the prospects of where AI is going here. We've seen that Romain kind of filter into this broader conversation about the way that's affecting the build out that's taking place here as well. Uh the anxiety that we've seen in terms of a number of these data center companies pulling back on their IPOs. Uh it's it's definitely spreading it seems this sense of anxiety. and we've seen the president in recent days trying to quell that a little bit as well.

Let's walk through some of the numbers as we wait for the closing bells and we wait for those earnings out of Micron. The end of the day, the end of the month, the end of the quarter. The S&P back in the red on the day down about 2/10 of a percent as we wait for these numbers to settle. That means it will close lower for the month by about 4/10 of a percent. The Dow Jones industrial average losing about 400 points on the day, down about 8/10 of a percent, uh and it's going to be lower on the month by about 4%. The Nasdaq indices each in the green on the day, just up about 2/10 of a percent. Both indices in the green on the month as well. The Russell 2,000 closing out the day down 11 points or 4/10 of a percent and down 5.4% for the month of September.

Can't emphasize enough here how much better this is when I can hear you loud and clear, Romaine. Obviously, something that investors are paying very close attention today to was the amount of economic data that we got. Really a torrent of economic data about consumer spending. Uh we got the core PCE numbers, of course, which are so important to Federal Reserve policy makers. We saw investors in real time kind of recalibrating their sense of what the Fed is going to do at that next meeting at the end of October. It seems like what, 40% of them now expect the Fed is not likely to hike at that next meeting.

Yeah, and you see that reflected in kind of what sectors were doing well today. We do have information technology leading the way, uh when you look at, you know, the sector breakdown of the S&P 500, that green section is all IT. Consumer discretionary following up as well on that consumer spending data. Consumer staples lagging the most.

Micron earnings crossing the wire right now. Let's get right to it. expectations were high and on the surface, it does appear that they met those expectations. adjusted revenue in the fiscal fourth quarter, 5.4, excuse me, 54.23 billion. The street was looking for roughly about $52 billion. We should point out on a year-over-year basis, that's growth of about 370%. Gross margin in the quarter expanded to 87% up from 86.2, and here's your bottom line number, adjusted EPS for the quarter, $33.42 a share. The street was looking for 3183. The guidance for the current quarter that we're in, the fiscal first quarter, the company says expect adjusted EPS of $37.15 to $39.15. The low end of that range is above the average of analyst estimates for 36.02. And finally guys, the revenue figure for the current quarter, the company guiding the 60 to $63 billion in revenue. The street estimate was for 57 billion. The knee jerk reaction though is basically the shares, we'll call it unchanged.

There you go. Romain, I'm going to stick with those revenues for this Boise-based behemoth here and kind of look under the hood a little bit here. And you really see beats across the board when you look at cloud memory, that beat $16.28 billion. Uh the estimate $15 billion, automotive and embedded revenues, 6.82 as well. Look, we're talking about this of course in the context of AI and that build out, but this is very much a comp a company, uh that is so so widely involved in so many uh aspects of the broader tech space.

And I think I've been looking at um SanDisk uh which was as much up as much as 14%. It's down about half a percent today. But when you look at SanDisk and Micron, overall, they've outpaced Nvidia this year. And part of that, I think you're seeing not only from the numbers that David was just mentioning, but when you look at a regulatory infrastructure, obviously those are not, you're not seeing those uh fears evaluate through the market because you had this big press conference at the White House this week. You had all the AI leaders talking about it. Unclear if that was going to hit, uh you know, all these uh earnings numbers, but obviously it's too early. But um it's it's good news for them so far and they've really been outpacing uh some competitors so far.

And we're getting a little bit more details about these earnings. One number sticking out to me, fourth quarter core data center revenue. A big beat here, $18 billion versus estimates of just 11.3. Of course, we know the data center trade is alive and well and we're seeing that in these results. Another one, fourth quarter adjusted operating income also beating estimates remains.

Yeah, and we should point out that when you look at sort of the unchanged nature of the shares, remember, they had rallied about 40% off of those lows from the summer and still up something like close to 300% on a year-to-date basis. and a big part of the reason guys, is to a certain extent the numbers from last quarter, the numbers for the current quarter are probably a little bit less important than what the company says on the conference call about the long-term picture. Looking into 2027 calendar year, 2028 and even beyond. Remember, when we heard from SanDisk, we heard from Nvidia, we heard from some of the other chip makers, it was really about that multi-year forecast and whether that runway for this for AI spending would actually continue.

Looking at fourth quarter cash flow from operations, 43.97 billion. And we were talking just a few moments ago with the CFO of HPE. I just talking about sort of how emblematic this is, a company that has been around now for many years kind of transitioning into a very AI focused, AI network focused company. Uh, again, we're we're seeing this transition taking place really across the the spectrum guys.