Micron Technology Reports Robust Growth Driven by AI Demand
Micron Technology has forecasted first-quarter revenue exceeding Wall Street's projections and reported a notable surge in fourth-quarter revenue, marking the highest growth in over a decade. This upswing is largely attributed to the escalating demand for its memory chips, which are pivotal in the artificial intelligence (AI) industry.
Following the report, Micron's shares, already up by approximately 12% this year, saw a further increase of over 13% in after-hours trading. The U.S.-based company is one of the few global providers of high-bandwidth memory (HBM) chips, alongside South Korea's SK Hynix and Samsung. This strategic position has enabled Micron to capitalise on the growing need for semiconductors that support generative AI technology.
HBM chips are a form of dynamic random access memory (DRAM) that is both space-efficient and power-efficient, essential for AI-focused graphics processing units (GPUs) tasked with processing extensive data sets. Micron CEO Sanjay Mehrotra highlighted the sustained strong demand from data centre customers, noting that customer inventory levels remain healthy.
In a significant disclosure made in June, Micron revealed that its HBM chips, integral to AI processors devised by Nvidia, were fully booked for the calendar years 2024 and 2025, with prices already established.
Looking ahead, Micron anticipates record-breaking revenue of approximately $8.7 billion for the first quarter and projects a substantial increase in gross margin to 39.5% for the same period. This considerably surpasses analysts' expectations, who predicted revenue of $8.28 billion and an adjusted gross margin of 37.7%, according to data from LSEG.
The burgeoning AI sector has been a boon for Micron, providing a buffer against the downturn caused by an inventory surplus in the PC and smartphone memory chip markets. Typically an early reporter within the semiconductor sector, Micron's performance often sets the benchmark for the industry due to its extensive client base spanning PCs, data centres, and smartphones.
For the upcoming first quarter, Micron has forecasted an adjusted profit of $1.74 per share, with a possible variance of 8 cents, outperforming analysts' predictions of $1.65 per share.
Source: Noah Wire Services