Micron Technology forecasted third-quarter revenue and reported second-quarter revenue that exceeded Wall Street expectations, indicating strong demand for its high-bandwidth memory (HBM) chips used in the AI industry.
Shares rose nearly 4% in after-hours trading, following a 9% increase earlier in the month due to investor optimism about AI-driven demand.
This demand has significantly increased the need for Micron's HBM chips, a type of dynamic random access memory (DRAM) crucial for advanced AI systems, designed to save space and reduce power consumption.
Micron also manufactures flash memory NAND chips for the data storage market.
CEO Sanjay Mehrotra stated that Micron expects growth in DRAM and NAND demand across both data center and consumer markets, as well as significantly improved profitability in fiscal year 2025.
Micron did not factor in the potential impact of new tariffs imposed by the U.S. administration in its forecast, citing uncertainty surrounding their timing, nature, and implementation.
The company’s positive forecast, which surpassed analyst expectations for both revenue and earnings, emphasizes its critical role in supplying essential memory components for AI infrastructure, according to Michael Ashley Schulman, chief investment officer at Running Point Capital.
Micron has observed inventory reductions among its PC and smartphone customers and anticipates a return to healthy levels by spring, following a buildup due to expectations of higher prices.
The company expects third-quarter revenue of $8.80 billion, plus or minus $200 million, surpassing the estimate of $8.5 billion. Second-quarter revenue, ending February 27, reached $8.05 billion, exceeding the estimate of $7.89 billion.
Excluding certain items, earnings per share were $1.56, which is also above the estimate of $1.42 per share.