Dec 17 : Micron Technology forecast second-quarter adjusted revenue at almost double what Wall Street analysts anticipated on Wednesday, as costs soar for reminiscence chips amid tight provides and booming demand from synthetic intelligence knowledge facilities.
Shares of the Boise, Idaho-based firm had been up 7 per cent in prolonged buying and selling after the forecast.
Micron stated it anticipated adjusted revenue of $8.42 per share, plus or minus 20 cents, versus analyst estimates of $4.78 per share, in accordance with LSEG knowledge.
Micron’s chips are elementary parts in every part from knowledge middle servers and private computer systems to smartphones and automobiles. But it is usually one in every of solely three main suppliers, together with South Korea’s SK Hynix and Samsung Electronics, of what are often known as high-bandwidth reminiscence (HBM)Â chips, important for coaching and deploying generative AI fashions.
In a convention name with traders, Micron CEO Sanjay Mehrotra stated he expects reminiscence markets to stay tight previous 2026 and that within the medium time period, Micron expects to fulfill solely half to two-thirds of demand from a number of key clients.
Reuters beforehand reported {that a} reminiscence chip crunch is pressuring smartphone makers. In an interview with Reuters on Wednesday, Sumit Sadana, Micron’s chief enterprise officer, declined to specify which clients wouldn’t obtain the chips they sought.
“It is inevitable in this environment that lots of customers across all segments will see an impact on their ability to procure the amount of memory they want to procure,” Sadana stated. “I don’t know of any customer that is getting 100 per cent of what they want from us – and there are many, many that are getting substantially less than what they feel they need.”Â
Micron executives stated the corporate is negotiating multiyear contracts with key clients and can improve its 2026 capital expenditure plans to $20 billion from an earlier $18 billion estimate.
“AI-related demand remains the biggest driver for Micron,” stated Summit Insights analyst Kinngai Chan. “It not only drives better margin for the company, but also helps non-AI product margins as it prioritizes its supply towards AI-related demand.”
The firm is seeing robust demand from knowledge facilities, fueled by elevated spending by large-scale cloud service suppliers that provide {hardware} and cloud capability as companies.Â
Micron has been adjusting its manufacturing amenities to give attention to demand from AI knowledge facilities. Earlier this month, the corporate stated it could dissolve its enterprise of promoting reminiscence chips on to customers by way of the “Crucial” model title.
“Micron has strategically repositioned its production capacity for the AI sector,” eMarketer analyst Jacob Bourne stated in a press release. “As AI demand continues to soar and along with it key components, Micron will be among the winners that can supply those components, which include memory chips.”
The firm projected income for the present quarter at $18.70 billion, plus or minus $400 million, in contrast with analysts’ common estimate of $14.20 billion, in accordance with knowledge compiled by LSEG.
For the just-ended fiscal first quarter, Micron stated it had gross sales and adjusted revenue of $13.64 billion and $4.78 per share, in contrast with analyst estimates of $12.85 billion and $3.95 per share, in accordance with LSEG knowledge.