One other day, one other blowout earnings report from a semiconductor company, as Micron Technology (NASDAQ:MU) posted strong fiscal second-quarter earnings on Wednesday after the closing bell.

In truth, Micron crushed earnings and revenue estimates and called for continuing growth in its fiscal third quarter, driven mainly by its artificial intelligence-enabled chips. The corporate was the most important mover on the S&P 500 Thursday morning, rising some 15% to about $111 per share. Micron stock is now up by about 35% 12 months thus far.

Let’s dive into the earnings report and see if Micron stock remains to be buy.

Benefiting from AI

Semiconductor stocks, especially those who develop chips proficient at handling more complicated AI-enabled tasks, have been leading the market over the past 12 months. Over the past 12 months as of March 20, semiconductor stocks have notched a median return of 110% — greater than double the typical return of the next-closest segment within the technology sector. Micron is barely below the semiconductor average with a one-year return of just 90%, but most investors will take that.

The corporate makes a speciality of making memory and storage chips for computers, smartphones, data centers and other applications. Micron’s data-center segment has been powering its revenue currently, as its high-bandwidth-memory (HBM) chips have been in high demand.

Overall, Micron’s revenue hit $5.8 billion within the quarter, up 57% 12 months over 12 months, while its net income hit $793 million or 71 cents per share, up from a $2.3 billion loss in the identical quarter a 12 months ago. After subtracting the price of products sold, Micron’s gross margin was $1.1 billion, or 18.5% of revenue.

The Compute and Networking unit is the corporate’s largest, with revenue of $2.2 billion within the quarter driven largely by data center revenue. Further, Micron’s Storage Business Unit saw its revenue spike 79% 12 months over 12 months to $905 million, with revenue from data centers doubling.

“We’re within the very early innings of a multi-year growth phase driven by AI as this disruptive technology will transform every aspect of business and society,” President and CEO Sanjay Mehrotra said on the earnings call. “The race is on to create artificial general intelligence, or AGI, which can require ever-increasing model sizes with trillions of parameters. … We view Micron as certainly one of the most important beneficiaries within the semiconductor industry of this multi-year growth opportunity driven by AI.”

Is Micron a buy?

Micron is well-positioned to grow with the AI boom, as Mehrotra discussed on the decision. He cited the corporate’s HBM3E solution, which provides greater than 20 times the memory bandwidth of the usual offering.

“We commenced volume production and recognized our first revenue from HBM3E in fiscal Q2 and now have begun high-volume shipments of our HBM3E product,” Mehrotra added on the decision.

Along with the upper capability, it has 30% lower power consumption, which is contributing to strong demand. He noted that the HBM3E chip shall be a component of NVIDIA’s H200 Tensor Core GPUs. Mehrotra also said the corporate is on target to generate several hundred million dollars of revenue from its HBM chip in fiscal 2024.

Micron’s outlook for the fiscal third quarter calls for $6.6 billion in adjusted revenue, +/-$200 million. At the middle of the range, it will represent a 14% increase over the past quarter. The gross margin is projected to be within the range of 26.5%, +/-150 basis points; up from 18.5% within the last quarter. Further, operating expenses are targeted at $990 million, +/-$15 million, up from $959 last quarter. Micron also guided for adjusted earnings per share for Q3 of 45 cents per share, +/-7 cents, versus 42 cents in Q2.

The chipmaker was unprofitable last 12 months because of higher investments and stagnating sales for its regular memory chips. Nevertheless, the investments in its HBM AI chips are already beginning to repay because it looks to ride the AI wave.

Micron forecasts one other profitable quarter in Q3 and may see continued earnings accretion from its HBM chips. I’m a bit of wary within the short term, given the corporate’s rising price-to-sales ratio, and things could flatten out a bit after this surge today. Nevertheless, over the long term, there’s so much to love about Micron.