Micron Technology Inc. (NASDAQ:MU) experienced a significant drop of nearly 8% in after-hours trading, following its latest earnings report. However, Gene Munster, the managing partner at Deepwater Asset Management, remains optimistic about the company’s AI prospects.

What Happened: Munster on X, pointed out that the pressure point of High Bandwidth Memory revenue, which accounts for 2% of the total revenue, is lower than in previous quarters. He predicted a 10-15% increase in HBM revenue for the next year. “Good news is the AI trade is intact,” he said.

He explained that the earnings report was not impressive enough to excite fast-money investors, leading to the stock sell-off. However, Micron’s AI story remains intact, with an 82% year-over-year growth and a projected 90% growth in line with the Street’s expectations.

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Munster emphasized that the most crucial aspect of the update is Micron’s plans to ramp up HBM this year, aiming to capture a significant market share of around 20% next year, up from zero at the beginning of the year.

He also noted that Micron is already completely sold out of HBM through the end of 2025, a significant change from their previous forecast of being sold out for most of 2025.

Why It Matters: Micron’s third-quarter earnings report, released on Wednesday, revealed a revenue of $6.81 billion, surpassing the consensus estimate of $6.634 billion. The company also reported an adjusted earnings of 62 cents per share, beating analyst estimates of 49 cents per share.

Micron has consistently outperformed analyst expectations, beating estimates on both top and bottom lines for five consecutive quarters. The company’s focus on expanding AI-driven opportunities has been a significant factor in its recent performance.

Despite the current stock drop, Micron’s long-term outlook remains positive, particularly with its plans to increase HBM revenue and market share.

Price Action: Micron Technology Inc. closed at $142.36 on Wednesday, up 0.88% for the day. In after-hours trading, the stock dropped to $131.00, a decline of 7.98%. Year to date, Micron has seen a substantial increase, rising by 72.89%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote