Micron Technology (MU) has forecasted first-quarter revenue above Wall Street estimates, driven by strong demand for its high bandwidth memory (HBM) chips used in the AI industry. This positive outlook has resulted in a 10% surge in the company’s shares after the bell.
Being one of the only three providers of HBM chips alongside South Korea’s SK Hynix and Samsung, Micron has been able to capitalize on the growing demand for semiconductors that power generative AI technology.
The AI boom has also been beneficial for Micron, helping to offset the impact of a memory chip inventory glut in PC and smartphone markets.
The company has projected revenue of $8.70 billion, plus or minus $200 million, for the first quarter, surpassing estimates of $8.28 billion. Micron’s results are closely watched in the chip sector as it reports ahead of peers and caters to a wide client base spanning the PC, data center, and smartphone industries.
In June, Micron announced that its HBM chips were already sold out for the 2024 and 2025 calendar years, with these chips being utilized in AI processors developed by Nvidia.
For the first quarter, Micron anticipates an adjusted gross margin of 39.5%, plus or minus 1%, exceeding analysts’ expectations of 37.7%. In the fourth quarter, the company’s revenue surged by 93% to $7.75 billion.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shounak Dasgupta)