Micron Technology reported fiscal third-quarter earnings after the close Wednesday that were not close to expectations, they were in a different zip code from expectations, and the stock responded accordingly.
Shares rose 14 to 15 percent in after-hours trading to approximately $1,185-$1,199, after closing the regular session at $1,047.20.
The numbers, revenue of $41.46 billion against analyst estimates of approximately $35.84 billion, a 16 percent beat. Adjusted EPS of $25.11 against estimates of around $20.49, a 22 percent beat.
Revenue increased from $9.3 billion in the same quarter a year ago, meaning Micron's sales nearly quadrupled year over year. Gross margin reached 84.9 percent, a company record.
Free cash flow hit a record. It was the company's fifth consecutive quarterly sales record.
Then management gave guidance that made the beat look modest. For the fourth quarter, Micron is projecting approximately $50 billion in revenue, against analyst expectations of roughly $43 billion.
Adjusted EPS guidance of $31. Gross margin of 86 percent.
The gap between what Wall Street was modeling and what Micron told them to expect for next quarter is larger than the Q3 beat.
CEO Sanjay Mehrotra framed the quarter simply:
"Micron's record fiscal Q3 financial results and even stronger outlook for Q4 reflect the strategic value of memory in the AI era."
The company said shipment growth is now limited by supply rather than demand, the specific statement that indicates pricing power and margin sustainability.
It has signed 16 to 17 long-term strategic customer agreements with data center operators and automakers locking in multi-year chip purchases.
Micron's stock is up approximately 700 percent over the past year. Its market cap has crossed $1 trillion.