Micron shares (MU) rose 17% before the bell on Thursday after the chipmaker forecast higher-than-expected revenue for the coming quarter.
Micron forecast first-quarter revenue of $8.5 billion to $8.9 billion, above the $8.3 billion analysts expected.
Company executives attributed the increased expectations to a more favorable pricing environment and robust demand for Micron’s memory chips used in data centers to power artificial intelligence.
“With the advent of AI, we are in the most exciting period I have seen in my career in memory and storage,” CEO Sanjay Mehrotra said on a call with investors Wednesday afternoon. Mehrotra said the company enters fiscal year 2025 with “the best competitive position in Micron’s history.”
Executives now expect the market for high-bandwidth memory (HBM) chips to rise to $25 billion by 2025, up from $5 billion this year – and that demand for HBM chips will reach several billion dollars next year deliver. .
Analysts from Wedbush, JPMorgan, TD Cowen and Raymond James reiterated their Outperform rating on the stock, encouraged by Micron’s comments on AI demand and the recovery in more traditional markets. For example, they pointed to recovering demand for Micron memory chips from PC and smartphone manufacturers.
Wedbush’s Matt Bryson said Micron’s first-quarter outlook “highly reflects our belief that overall memory dynamics are likely to improve significantly beyond early next year.”
Analysts at Raymond James said: “HBM demand remains strong and Micron appears firmly on track to achieve its targets.”
Micron is the first chipmaker to report quarterly results this earnings season. The report provides a first look at how the semiconductor sector is faring despite high expectations from Wall Street.
The company reported revenue of $7.75 billion in the fiscal fourth quarter ended Aug. 29 – up 93% from last year and exceeding the $7.66 billion expected by analysts, who recently softened their expectations. Adjusted earnings per share of $1.18 also exceeded both the upper range of Micron’s expectations and Wall Street’s $1.11 forecast.
Micron’s memory chip business has undergone a resurgence in the past year as Big Tech companies pour billions into the semiconductor sector for hardware to power AI data centers.
Micron differentiates itself by partnering with, rather than competing with, industry powerhouse Nvidia (NVDA). Micron supplies memory chips for Nvidia’s highly sought-after GPUs.
