(June 25): Micron Technology Inc, the largest US maker of computer memory chips, surged in late trading after its quarterly sales forecast crushed Wall Street estimates, signalling that an AI-fuelled growth run remains strong.
Revenue will be approximately US$50 billion in the fiscal fourth quarter, which runs through August, the company said in a statement Wednesday. Analysts estimated US$43.2 billion on average. Excluding some items, profit will be about US$31 a share, compared with a projection of US$25.31.
Micron has also secured 16 strategic customer agreements, which average three years in length. That suggests the company can mitigate the boom-and-bust cycles that have plagued the memory chip industry, said Bloomberg Intelligence analyst Jake Silverman.
“This should sustain upward pricing revisions through at least 2027, albeit at a decelerating pace,” he said in a note. “The agreements can also reduce pricing volatility as supply catches up to demand by around 2029, we calculate.”
The shares climbed about 14% in late trading after the report was released. They had already more than tripled this year, outpacing all other major US chip stocks.
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Micron posted the results at a delicate moment for the AI industry. Shares of chipmakers and other technology companies had been hammered in recent days on fears that a spending boom was faltering.
Wall Street was looking to Micron for reassurance — something the company delivered — and the upbeat outlook is poised to lift a broad swath of stocks. US share futures gained in the wake of the results, with contracts for the Nasdaq 100 climbing sharply.
Micron and its peers in the memory space — Samsung Electronics Co and SK Hynix Inc — have become major beneficiaries of the AI infrastructure build-out. A spending spree by data centre operators has stoked the appetite for both conventional memory and a newer variety called high-bandwidth memory, or HBM, that works with AI systems.
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The companies have struggled to satisfy memory-chip demand, creating shortages in areas like computers, phones and cars. Though Micron is expanding its manufacturing capacity, prices are expected to remain high for the foreseeable future.
Chief Executive Officer Sanjay Mehrotra said on a conference call with analysts that there was “no line of sight” to when supply will catch up with demand. The situation will persist beyond calendar 2027, he said, adding that availability of memory chips may improve gradually in 2028.
For the fiscal third quarter, which ended May 28, sales rose to US$41.5 billion. Earnings climbed to US$25.11 a share. Analysts on average had estimated US$35.7 billion in revenue and US$20.49 a share in profit.
In another sign of Micron’s widening profitability, its adjusted gross margin more than doubled to 84.9% last quarter. Analysts had estimated 81.9% for that measure, the percentage of sales remaining after deducting production costs.
Micron works with Nvidia Corp, the largest maker of artificial intelligence processors, to integrate its memory into AI infrastructure. Earlier this month, Nvidia chief executive officer Jensen Huang confirmed that his company will rely on Micron’s HBM4 memory, along with those of its rivals, for its next-generation Vera Rubin platform. All three of the major memory makers have been jockeying for a slice of that business.
SK Hynix, which currently leads the HBM market, just announced plans for a stock listing in the US. The company is seeking roughly US$29 billion in the offering, aiming to further capitalise on memory demand.
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