(Bloomberg) — Micron Technology Inc., the largest U.S. maker of computer memory chips, rose in late trading after giving surprisingly strong sales and profit forecasts, helped by demand for artificial intelligence equipment.
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Fiscal first-quarter revenue will be about $8.7 billion, the company said in a statement Wednesday. That compares with an average analyst estimate of $8.32 billion. Earnings will be about $1.74 a share, less certain items, versus a projection of $1.52.
The upbeat outlook is the latest sign that Micron is benefiting from a boom in AI spending. Orders for a type of product called high-bandwidth memory have added a lucrative new revenue stream for the company and other chipmakers. The technology helps develop AI systems by providing faster access to large amounts of information.
Demand has outstripped supply, allowing Micron to raise prices and secure long-term contracts. The company has already sold out of all products for 2024 and 2025, it said Wednesday.
Shares rose about 14% in trading after the announcement. Micron, which had gained 12% this year, closed at $95.77 in regular New York trading.
Micron’s fiscal fourth-quarter results also far exceeded estimates. Revenue rose 93% to $7.75 billion in the period ended Aug. 29. Excluding certain items, profit was $1.18 per share. Analysts on average had estimated profit of $1.12 per share and revenue of $7.66 billion.
Micron has an advantage because it is the first chipmaker to reliably offer more advanced memory in high volumes, Executive Vice President of Operations Manish Bhatia said in an interview. With companies racing to beef up their AI software and hardware — and using more memory in the process — Micron is in a good position, he said.
The chipmaker is also emerging from a slowdown in demand for personal computers and smartphones, two of the biggest memory markets. Device shipments are growing again, Micron said. Those devices will increasingly feature artificial intelligence features that require more memory chips to function properly, adding an additional benefit, Bhatia said.
Micron makes dynamic random-access memory, or DRAM, a type of chip that temporarily stores information and works alongside processors from companies including Nvidia Corp. and Intel Corp. It also makes Nand flash memory, semiconductors that store information in everything from data center computers to smartphones.
“Strong demand for artificial intelligence drove strong growth for our data center DRAM products,” CEO Sanjay Mehrotra said in the release. “We enter fiscal 2025 with the best competitive positioning in Micron’s history.”
The company is one of the few to have survived the brutal boom-and-bust cycles of the device industry. Those swings in demand have made it difficult to maintain steady profits, but the company has been climbing out of the latest downturn. The chipmaker competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc. in the memory market.
(Updates executive comments starting with the seventh paragraph.)
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