A new disclosure about Micron's buyback plans appears meant to show shareholders the company is more generous with cash than one of its key rivals, an analyst says

Micron has raised its share-repurchase authorization by $33 billion.

As Micron Technology investors await the resumption of share repurchases after a two-year pause, one analyst sees a sign that Micron plans to be more generous than one of its major peers.

In a Form 10-K filed on Friday, the memory-chip maker (MU) said its board of directors had authorized an additional $33 billion in buybacks, to bring its total authorization to $35.16 billion. As a recipient of funding from the Chips and Science Act in 2024, Micron has been restricted from buying back stock until December of this year.

TD Cowen analyst Krish Sankar said he'd been expecting a lower number, around $20 billion, given that Micron has a smaller share of the memory market than its South Korean rival SK Hynix (SKHY), which has authorized about $29 billion in share repurchases.

In his view, Micron's larger program "is meant to attract more capital and show that Micron can be more shareholder-friendly than Hynix, while being prudent with long-term capital allocation," Sankar said in a note to clients.

Sankar noted that the current $35 billion authorization is less than the gross profit of about $47 billion that Micron posted in its most recent quarter alone. For comparison, Micron's last authorization of $10 billion in May 2018 was about two quarters' worth of gross profit at the time.

Therefore, the company now "has materially more earnings power" compared to its share-repurchasing plans, while it also has better visibility into customer demand through its new long-term agreements. To Sankar, that leaves room for further buyback authorizations down the line.

While Micron has benefited from the memory supply crunch by being able to raise prices for components, Sankar noted that pricing could start to decline in the third quarter of 2027. For now, however, he said Micron's visibility into its business should continue to improve, while its capital returns to shareholders could set it up for a higher valuation.

Micron did not immediately respond to a request for comment from MarketWatch on the latest authorization.

Additionally, Sankar noted that Nvidia no longer makes up more than 10% of Micron's quarterly revenues the way it had for the six quarters through Micron's fiscal second quarter, mainly due to its purchases of high-bandwidth memory.

That doesn't mean Nvidia is becoming less of a customer, Sankar said, but rather that Micron's "other customers are growing faster."

Micron's stock was down more than 4% Monday morning amid declines across the broader chip sector.

The memory maker's stock fell as its Chinese rival ChangXin Memory Technologies (CN:688825) reportedly announced "key progress" on a technique to improve memory density on a single chip, according to the South China Morning Post.

Cao Kanyu, president of CXMT, reportedly said that a new product for server memory based on 4F square cell architecture, which involves fitting more memory cells onto a semiconductor, is expected to launch later this year.

SK Hynix and Samsung Electronics (KR:005930) are also working on products based on 4F cell architecture.

-Britney Nguyen