Micron forecasts blowout earnings on booming AI market, shares rise 5.7%

MICRON Technology forecast second-quarter adjusted profit at nearly double what Wall Street analysts expected on Wednesday, buoyed by soaring prices for memory chips spurred by tight supplies and booming demand from artificial intelligence data centers.

Shares of the Boise, Idaho-based company were up 5.7 per cent in extended trading after the forecast.

Micron said it expected adjusted profit of US$8.42 per share, plus or minus 20 cents, versus analyst estimates of US$4.78 per share, according to LSEG data.

Micron’s chips are fundamental components in everything from data centre servers and personal computers to smartphones and vehicles.

But it is also one of only three major suppliers, along with South Korea’s SK Hynix and Samsung Electronics, of what are known as high-bandwidth memory (HBM) chips, essential for training and deploying generative AI models.

“AI-related demand remains the biggest driver for Micron,” said Summit Insights analyst Kinngai Chan. “It not only drives better margin for the company, but also helps non-AI product margins as it prioritizes its supply towards AI-related demand.”

The company is seeing strong demand from data centres, fuelled by increased spending by large-scale cloud service providers that offer hardware and cloud capacity as services.

Micron has been adjusting its production facilities to focus on demand from AI data centres. Earlier this month, the company said it would dissolve its business of selling memory chips directly to consumers via the “Crucial” brand name.

“Micron has strategically repositioned its production capacity for the AI sector,” eMarketer analyst Jacob Bourne said in a statement. “As AI demand continues to soar and along with it key components, Micron will be among the winners that can supply those components, which include memory chips.”

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The company projected revenue for the current quarter at US$18.70 billion, plus or minus US$400 million, compared with analysts’ average estimate of US$14.20 billion, according to data compiled by LSEG.

For the just-ended fiscal first quarter, Micron said it had sales and adjusted profit of US$13.64 billion and US$4.78 per share, compared with analyst estimates of US$12.85 billion and US$3.95 per share, according to LSEG data. REUTERS