Micron forecasts blowout earnings on booming AI market, shares rise 7%
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Dec 17 : Micron Technology forecast second-quarter adjusted profit at nearly double what Wall Street analysts expected on Wednesday, as prices soar for memory chips amid tight supplies and booming demand from artificial intelligence data centers.
Shares of the Boise, Idaho-based company were up 7 per cent in extended trading after the forecast.
Micron said it expected adjusted profit of $8.42 per share, plus or minus 20 cents, versus analyst estimates of $4.78 per share, according to LSEG data.
Micron's chips are fundamental components in everything from data center servers and personal computers to smartphones and vehicles. But it is also one of only three major suppliers, along with South Korea's SK Hynix and Samsung Electronics, of what are known as high-bandwidth memory (HBM) chips, essential for training and deploying generative AI models.
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In a conference call with investors, Micron CEO Sanjay Mehrotra said he expects memory markets to remain tight past 2026 and that in the medium term, Micron expects to meet only half to two-thirds of demand from several key customers.
Reuters previously reported that a memory chip crunch is pressuring smartphone makers. In an interview with Reuters on Wednesday, Sumit Sadana, Micron's chief business officer, declined to specify which customers would not receive 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 said. "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."
Micron executives said the company is negotiating multiyear contracts with key customers and will increase its 2026 capital expenditure plans to $20 billion from an earlier $18 billion estimate.
"AI-related demand remains the biggest driver for Micron," said 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 company is seeing strong demand from data centers, fueled by increased spending by large-scale cloud service providers that offer hardware and cloud capacity as services.
Micron has been adjusting its production facilities to focus on demand from AI data centers. Earlier this month, the company said it would dissolve its business of selling memory chips directly to consumers via the "Crucial" brand name.
"Micron has strategically repositioned its production capacity for the AI sector," eMarketer analyst Jacob Bourne said in a statement. "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 company projected revenue for the current quarter at $18.70 billion, plus or minus $400 million, compared with analysts' average estimate of $14.20 billion, according to data compiled by LSEG.
For the just-ended fiscal first quarter, Micron said it had sales and adjusted profit of $13.64 billion and $4.78 per share, compared with analyst estimates of $12.85 billion and $3.95 per share, according to LSEG data.
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