Micron Technology Inc. (MU.O) saw its shares jump approximately 14% in after-hours trading following a bullish forecast for first-quarter revenue, buoyed by robust demand for its memory chips utilized in artificial intelligence (AI) computing. As one of only three major suppliers of high-bandwidth memory (HBM) chips, alongside South Korea’s SK Hynix (000660.KS) and Samsung (005930.KS), Micron is capitalizing on the surge in semiconductor demand driven by generative AI technology.
HBM chips are a compact, power-efficient type of dynamic random access memory (DRAM), essential for AI-focused graphics processing units that process large datasets. “Demand from data center customers remains strong, and customer inventory levels are healthy,” stated Micron CEO Sanjay Mehrotra during a conference call with analysts.
In June, Micron announced that its HBM chips, integral to AI processors designed by Nvidia (NVDA.O), are sold out for 2024 and 2025, with pricing already established. The company anticipates reporting record revenue of around $8.7 billion, with a margin of error of $200 million, for the upcoming quarter, along with an expected gross margin increase to approximately 39.5%.
Analysts had predicted revenue of $8.28 billion and an adjusted gross margin of 37.7%, according to LSEG data. The ongoing AI boom has also mitigated the impact of a memory chip inventory surplus in the PC and smartphone markets. AI-enhanced personal computers are projected to contain over 30% more DRAM, particularly as Microsoft’s campaign to transition users to Windows 11 is expected to bolster demand for commercial PCs in 2025, noted Kinngai Chan, a senior research analyst at Summit Insights.
Micron’s performance often sets the tone for the semiconductor sector, as the company reports results ahead of its peers and serves a diverse client base across the PC, data center, and smartphone industries.
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