Micron's upcoming earnings report will test the AI storage bull market, with the market expecting its market capitalization to fluctuate by over $150 billion.

Micron Technology (MU.O) is set to release its fiscal third-quarter results after U.S. markets close on Wednesday. Before the earnings release, Micron’s stock has surged more than 7x over the past year, pushing its market capitalization past $1 trillion. The market expects Micron’s stock to swing roughly 14% post-earnings, corresponding to a market cap shift of over $150 billion. This rally is primarily driven by a severe memory chip shortage fueled by AI demand, which has lifted memory stocks including Micron, Samsung, and SK Hynix. The fiscal third quarter ended in May; consensus estimates call for Micron’s revenue to jump 279% year-over-year to $35.3 billion, with adjusted earnings per share (EPS) rising from $1.91 to $20.28. Given the company’s rapid growth, investors’ focus may extend beyond the just-completed quarter’s performance to its fiscal fourth-quarter guidance. Analysts currently forecast Micron’s fiscal fourth-quarter revenue at $42.5 billion, with adjusted EPS of $24.80. If the company delivers another set of guidance that significantly beats expectations, its stock could continue rising; however, at current valuation levels, any miss on key metrics could trigger a sharp pullback. Profit margins are also a core variable. Micron’s fiscal second-quarter gross margin hit 74.4%, up from 36.8% in the year-ago period and 56% in the first quarter. The company previously projected a gross margin of 81% for the third quarter. If gross margins continue to rise in the fourth quarter, it would signal that the memory pricing environment remains tight. Additionally, the market will watch whether management maintains its view that "supply tightness for data center and AI-related memory will persist beyond 2026". Micron previously stated that for some key clients, it can only meet 50% to two-thirds of their demand in the medium term.