Micron surges as global memory chip shortage boosts profit forecast

MICRON Technology shares rose nearly 14 per cent in premarket trading on Thursday (Dec 18), following an outsized profit forecast on the back of a worldwide supply crunch of memory chips, amid robust demand from AI data centres.

A memory shortage across industries – from smartphones to sprawling data centres – has boosted prices, helping Micron forecast second-quarter adjusted profit at nearly double of Wall Street expectations.

“Tight memory supply, caused by immense artificial intelligence (AI) infrastructure demand, is boosting incredible market pricing for Micron and its memory chip peers,” Morningstar analysts wrote in a note.

“The current cyclical upswing is generating tremendous shareholder value.”

Micron is one of only three major suppliers of high bandwidth memory (HBM) chips, alongside South Korea’s Samsung and SK Hynix. These chips are pivotal for training, and deploying generative AI models.

Micron’s share price has risen by over 160 per cent this year, while Samsung and SK Hynix’s South Korea-listed shares have more than doubled and tripled in value, respectively.

Micron is set to add over US$30 billion to its market capitalisation, if premarket gains hold.

In a conference call with investors on Wednesday, Micron CEO Sanjay Mehrotra said he expects memory markets to remain tight past 2026.

Memory is a highly cyclical industry, characteristically experiencing extreme downturns and highs with volatile pricing levels.

SEE ALSO

Oracle denies report on OpenAI data centre delays

Capella, Micron, DHL, ST Telemedia: Almost one-third of firms on regional list of top employers have Singapore presence

While analysts differ in their estimates of how long the ongoing upturn – routinely referred to as the supercycle – might last, Wall Street unanimously agrees that supply shortages could extend beyond Micron’s estimates, despite efforts to bring on more capacity.

The memory chipmaker has been retooling its production facilities to prioritise surging demand from AI data centres.

It also increased its 2026 capital expenditure plans to US$20 billion, as it ramps up investments to meet booming demand.

Though Morningstar analysts expect robust pricing to diminish in the long term, they see supply tightness persisting well into 2027. JP Morgan analysts also expect the supply shortage to last until 2027.

Micron has to strike a balance between allocating wafer capacity to high margin HBM, while also providing adequate supply to key customers in other, lower-margin industries, JP Morgan analysts said. REUTERS