Chipmaker Micron’s stock rises on a solid prediction driven by the AI boom

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Chipmaker Micron's stock rises on a solid prediction driven by the AI boom
Chipmaker Micron's stock rises on a solid prediction driven by the AI boom

Memory chip manufacturer Micron Technology revealed a stunning quarterly profit by leveraging the surge in artificial intelligence usage to predict revenue for the third quarter above estimates

The maker of memory chips, Micron Technology (MU.O.), opened a new tab and used the boom in the use of artificial intelligence to anticipate revenue for the third quarter above projections on Wednesday, reporting a surprising quarterly profit.

In extended trading, its shares surged by more than 16%, bringing their total gain over the previous 12 months to more than 60%. At its most recent close, Micron’s stock was trading at roughly $110, making it the highest closing price ever on Thursday.

Big IT businesses are racing to include generative AI, and the robust research and projections highlight the soaring need for high-end memory processors and other smart semiconductors.

According to CEO Sanjay Mehrotra, Micron’s high-bandwidth memory (HBM) chips, which are essential in the creation of intricate AI applications, were sold out for 2024, and the majority of the supply for 2025 had already been allocated.

Nvidia (NVDA.O), the leader in AI processors, has opened a new tab and selected Micron for the newest HBM 3E chips in its upcoming H200 graphics processing units (GPUs). Up until now, Nvidia’s only source for HBM chips has been South Korean rival SK Hynix (000660.KS).

According to Bob O’Donnell, chief analyst at Technalysis Research, “the impressive earnings and forecast from Micron suggest that GenAI momentum is spurring an important growth era for DRAM and, most importantly, HBM suppliers.”

Micron’s results, which were released before those of other chip manufacturers, are closely examined as a barometer of end-market and chip type demand. In extended trading, shares of peer Western Digital (WDC.O), which opens a new tab, rose 4.6% due to its optimistic prediction.

According to Mehrotra, HBM revenues could boost Micron’s gross margins in the third quarter. The firm is still on schedule to earn several hundred million dollars from advanced chips in fiscal 2024, which represents a tiny but increasing portion of its overall sales.

It estimated revenue for the current quarter of $6.60 billion, give or take $200 million, which is significantly more than the $6.03 billion predicted by LSEG data.

In contrast to projections of a loss of 25 cents per share, the company reported an adjusted profit of 42 cents per share for the second quarter.

Additionally, according to Mehrotra, Micron’s bit supply growth in fiscal 2024 would still be slower than the rise in DRAM and NAND demand.

According to Mehrotra, prices are improving across the board for memory and storage end markets. The business anticipates more price increases for DRAM and NAND through 2024.

After plunging to some of its lowest points in years due to a pandemic-driven buying frenzy that finally created a supply glut, memory chip prices are now rising.

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