Micron Technology’s shares surged approximately 14% in after-hours trading following the company’s upbeat forecast for first-quarter revenue, driven by strong demand for its memory chips used in artificial intelligence computing.
As one of only three providers of high-bandwidth memory (HBM) chips—alongside South Korea’s SK Hynix and Samsung—Micron is well-positioned to capitalize on the growing semiconductor market that supports generative AI technology. HBM chips, known for their space-saving and power-efficient characteristics, are critical for AI-focused graphics processing units (GPUs), which process large volumes of data.
“Demand from data center customers remains robust, and inventory levels are healthy,” Micron CEO Sanjay Mehrotra stated during a conference call with analysts. The company reported in June that its HBM chips, which are utilized in Nvidia’s AI processors, are sold out for both the 2024 and 2025 calendar years, with pricing already established.
Micron anticipates record revenue of approximately $8.7 billion, with a margin of plus or minus $200 million, for the first quarter. The forecast also includes a projected increase in gross margin to around 39.5%. Analysts had previously expected revenue of $8.28 billion and an adjusted gross margin of 37.7%, according to LSEG data.
The AI boom has significantly mitigated the impact of a memory chip inventory surplus in the PC and smartphone markets. With personal computers increasingly integrated with AI technologies, the demand for memory chips is set to rise. AI-enabled PCs may require over 30% more DRAM, and Microsoft’s initiative to encourage users to upgrade to Windows 11 could further expand the market, particularly for commercial PCs in 2025, noted Summit Insights senior research analyst Kinngai Chan.
Micron’s performance often sets the tone for the semiconductor sector, as it reports ahead of its peers and serves a diverse range of clients across the PC, data center, and smartphone industries. “Each of our three product categories—HBM, high-capacity memory, and data center flash storage—will generate multiple billions in revenue by 2025,” added Micron’s Chief Business Officer Sumit Sadana.
For the upcoming quarter, Micron is forecasting an adjusted profit of $1.74 per share, with a margin of plus or minus 8 cents, compared to analysts’ estimates of $1.65.
