Micron Technology Forecasts Strong First-Quarter Results Amid AI Demand Surge
Micron Technology anticipates strong first-quarter results, driven by a surge in AI demand. Following the revenue growth announcement, the company's shares rose nearly 14%. Micron's strategic position as a provider of HBM chips allows it to capitalise on the AI technology trend.
The company reported the highest fourth-quarter revenue growth in more than a decade, citing increased demand for its memory chips in AI applications.
Following the announcement, Micron's shares increased by nearly 14% after the bell, adding to a year-to-date gain of approximately 12%. Micron is one of three major providers of high-bandwidth memory (HBM) chips, along with South Korea's SK Hynix and Samsung. This strategic position has allowed Micron to capitalise on the growing demand for semiconductors, which are critical for powering generative AI technology.
HBM chips are an important component in AI-focused graphics processing units because they allow for the efficient processing of large amounts of data. During a conference call with analysts, Micron CEO Sanjay Mehrotra highlighted strong demand from data centre customers as well as healthy customer inventory levels.
Micron announced in June that its HBM chips, which are used in Nvidia's AI processors, were already sold out for the calendar years 2024 and 2025, with pricing determined. The company expects to report record revenue of approximately $8.7 billion in the first quarter, with a projected gross margin of around 39.5%.
Analysts had expected revenue of $8.28 billion in the first quarter, with an adjusted gross margin of 37.7%. The AI boom has not only boosted Micron's performance, but it has also helped to mitigate the effects of a memory chip inventory surplus in the PC and smartphone markets.
The integration of AI technologies in personal computers is expected to increase demand for memory chips, benefiting companies such as Micron. AI-powered PCs are expected to require more than 30% more dynamic random access memory (DRAM), with Microsoft's move to Windows 11 likely expanding the market, particularly for commercial PCs, by 2025.
Micron's results are closely watched in the chip industry because it outperforms its competitors and serves a diverse client base that includes PC, data centre, and smartphone manufacturers. Micron's Chief Business Officer, Sumit Sadana, expects significant revenue growth in 2025 across product categories including HBM, high-capacity memory, and data centre flash storage.
Micron expects an adjusted profit of US1.74 per share in the first quarter, with an 8-cent variance, exceeding analysts' expectations of US$1.65 per share. The company's optimistic outlook reflects the strong momentum generated by the AI boom and rising demand for memory chips in a variety of industries.
Micron Technology projects upbeat first-quarter results driven by AI demand surge
Company's shares rise by nearly 14% following the revenue growth announcement
Micron's strategic position as an HBM chip provider enables it to capitalise on the AI technology trend
Source: REUTERS