Micron rises after demand for AI computing boosts forecast

(Bloomberg) — Micron Technology Inc., the largest U.S. maker of computer memory chips, rose in late trading after giving surprisingly strong sales and profit forecasts, helped by demand for artificial intelligence equipment.

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First-quarter fiscal revenue will be about $8.7 billion, the company said in a statement Wednesday. That compares to an average analyst estimate of $8.32 billion. Earnings will be about $1.74 per share, minus certain items, versus a projection of $1.52.

The rosy outlook is the latest sign that Micron is benefiting from a boom in artificial intelligence spending. Orders for a type of product called high-bandwidth memory have added a lucrative new revenue stream for the company and other chipmakers. The technology helps develop AI systems by providing faster access to massive pools of information.

Demand outstripped supply, leaving Micron to raise prices and secure long-term guaranteed contracts. The product has already sold out for 2024 and 2025, the company said Wednesday.

Shares rose about 14 percent in extended trading following the announcement. Micron, which has gained 12 percent this year, closed at $95.77 in regular trading in New York.

Micron’s fiscal fourth quarter results also easily beat estimates. Revenue rose 93% to $7.75 billion in the period, which ended Aug. 29. Excluding certain items, profit was $1.18 per share. On average, the analyst expected earnings of $1.12 per share and revenue of $7.66 billion.

Micron has an advantage because it is the first chipmaker to reliably deliver more advanced memory in large volumes, Executive Vice President of Operations Manish Bhatia said in an interview. With companies looking to improve their AI software and hardware — and using more memory in the process — Micron is in a good position, he said.

The chipmaker is also emerging from a slowdown in demand for personal computers and smartphones, two of the biggest markets for memory. Device shipments are now picking up again, Micron said. These devices will increasingly have AI functionality that requires more memory chips to function properly, adding another benefit, Bhatia said.

Micron makes dynamic random access memory, or DRAM, a type of chip that temporarily stores information and works alongside processors from companies such as Nvidia Corp. and Intel Corp. It also makes Nand flash memory – semiconductors that store information in everything from data-centric computers to smartphones.

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“Robust demand for AI has driven strong growth in our DRAM products for our data centers,” Chief Executive Sanjay Mehrotra said in the statement. “Enter fiscal 2025 with the best competitive position in Micron’s history.”

The company is one of the few to survive the device industry’s brutal boom and bust cycles. These fluctuations in demand made it difficult to maintain consistent profits, but the company emerged from the last crisis. The chip maker competes with Samsung Electronics Co. and SK Hynix Inc. from South Korea in the memory market.

(Updates executive comments beginning in seventh paragraph.)

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