Micron's Stock Soars on Strong AI-Driven Forecast, Fueling Chip Industry Rally

Micron rises 13% as strong forecast impresses AI-hungry investors

The forecast drove up shares of other chip firms earlier in the day, but they pared gains after a media report said the U.S. Department of Justice was probing server maker Super Micro Computer. Super Micro, a big customer of chipmakers, resells and employs their products in its servers. Shares of Nvidia, Intel and Broadcom gave up earlier gains of more than 2% to trade only slightly higher.Micron Technology surged more than 13% on Thursday, after its first-quarter revenue forecast indicated strong demand and pricing for the high-bandwidth memory chips (HBM) used to support booming generative artificial intelligence technology. The company, an Nvidia supplier, was on track to add more than $14 billion to its market capitalization. Micron delivered its best quarterly revenue growth in a decade in the fourth quarter ended Aug. 29 and its forecast for the current period came in widely above Wall Street estimates. "If Micron, one of the higher-cost memory providers, is bullish on the market, it bodes well for all of AI and tech," said Ryan Detrick, chief market strategist at Carson Group. The forecast drove up shares of other chip firms earlier in the day, but they pared gains after a media report said the U.S. Department of Justice was probing server maker Super Micro Computer. Super Micro, a big customer of chipmakers, resells and employs their products in its servers. Shares of Nvidia, Intel and Broadcom gave up earlier gains of more than 2% to trade only slightly higher. Qualcomm and AMD were up about 2%. The Philadelphia Semiconductor Index trimmed its gains to trade 2% higher, after rising more than 4% earlier in the day. The bar for Micron was relatively lower this earnings cycle, analysts said. Concerns HBM pricing was weakening due to rising supply had weighed on the stock ahead of the report, with Micron's shares losing more than 20% over the last three months. With those fears allayed, strong HBM pricing is now expected to help Micron's gross margins after an expensive ramp-up of its manufacturing capacity for the chips. The company's expectations for first-quarter adjusted gross margin were above estimates. It also saw a big improvement in adjusted gross margin in the fourth quarter to 36.5%. "It's clear that the AI gravy train hasn't run out of steam as customers including Nvidia have been queuing up for Micron's HBM chips," said Dan Coatsworth, investment analyst at AJ Bell. "Big demand equals big prices, helping Micron smash margin expectations."

Micron stock soars 16% thanks to AI-driven revenue that's expected to grow even more

Global chip stocks rallied after U.S.-based Micron's (MU) revenue forecast topped Wall Street's expectations. Micron shares were up over 18% in pre-market trading on Thursday morning, then stayed up around 17% after the market open. Micron's earnings report boosted global chipmakers' stocks, including South Korea's SK Hynix, which saw its shares rise 9.4% -- the highest it has climbed in six months, Bloomberg reported. SK Hynix shares were also responding to its announcement that its new artificial intelligence chips had started mass production. South Korea's Samsung closed up over 4% on Thursday, and shares of Tokyo Electron closed up 8% in Japan, CNBC reported. Tokyo Electron shares were also driven by a statement to Nikkei Asia by its chief finance officer that it sees AI-related sales jumping 150% in the current fiscal year. In the Netherlands, Dutch semiconductor equipment manufacturer ASML (ASML) saw its shares rise over 4% in early morning trading, according to CNBC. The chipmaker set its revenue guidance at $8.7 billion, plus or minus $200 million, for the first quarter of 2025. Analysts had expected around $8.3 billion for that quarter, according to estimates compiled by FactSet. Micron, which produces memory and data storage chips for computers, reported revenue of $7.75 billion for the fourth quarter of fiscal year 2024. Its revenue for the quarter was up almost 14% from the previous quarter, and up 93% year-over-year. "[R]obust AI demand drove a strong ramp of our data center DRAM products and our industry-leading high bandwidth memory," Micron chief executive Sanjay Mehrotra said in a statement. "Our NAND revenue record was led by data center SSD sales, which exceeded $1 billion in quarterly revenue for the first time." Mehrotra said Micron is going into fiscal year 2025 "with the best competitive positioning in Micron's history," adding that the company expects record revenue in the first quarter of the next fiscal year.

The Ultimate Artificial Intelligence (AI) Stock to Buy Hand Over Fist Right Now (Hint: It's Not Nvidia)

This chip stock is not only cheaper than Nvidia, but it is set to grow at a faster pace than the AI pioneer as well. The proliferation of artificial intelligence (AI) has turned out to be a huge catalyst for the semiconductor industry, and that's not surprising as training and moving AI models into production is possible only through chips that are being deployed in huge numbers in data centers. This is the reason why Nvidia (NVDA -3.66%) has witnessed a massive spurt in demand for its graphics processing units (GPUs). The ability of GPUs to process huge amounts of data simultaneously has made them the default choice for cloud service providers to train large language models (LLMs). This explains why Nvidia's data center business has been growing at a phenomenal pace over the past few quarters and is expected to get even bigger in the future. However, GPUs aren't the only kind of chips that are in terrific demand thanks to the surge in AI adoption. Micron Technology (MU -3.28%), a manufacturer of memory chips, has also been winning big from the growing adoption of AI. This article takes a closer look at how AI has been driving Micron's business and examines why this memory specialist looks like a better AI stock to buy right now when compared to Nvidia. Micron Technology is benefiting from AI adoption in multiple areas Micron Technology released its fiscal 2024 fourth-quarter results (for the three months ended Aug. 29) on Sept. 25. The company's revenue shot up 93% year over year to $7.75 billion, exceeding the consensus estimate of $7.65 billion. Additionally, Micron swung to a profit of $1.18 per share last quarter as compared to a loss of $1.07 per share in the same period last year. Analysts were expecting the company to deliver $1.11 per share in earnings. It wasn't surprising to see Micron crushing Wall Street's estimates as the memory market's dynamics have been improving because of AI. For instance, the demand for Micron's data-center memory chips is exceeding supply, and that's not surprising as these chips are used by the likes of Nvidia while manufacturing their GPUs. More specifically, AI-focused GPUs are equipped with high-bandwidth memory (HBM) chips thanks to their ability to process huge amounts of data quickly. This is the reason why Micron expects the HBM market to generate annual revenue of $25 billion in 2025 as compared to just $4 billion last year. The company also adds that it sold "several hundred millions of dollars" worth of HBM last year, and it has sold out its HBM capacity for next year already. Meanwhile, the adoption of AI is also leading to an improvement in the demand for solid-state drives (SSDs) used in data centers. Micron's data center SSD revenue tripled in fiscal 2024. It won't be surprising to see Micron maintaining impressive growth in this segment in the future as the deployment of AI servers is expected to drive an average annual growth of 60% in data-center SSD demand in the coming years, according to market research firm TrendForce. However, this isn't where Micron's AI-related catalysts end. The adoption of AI-enabled PCs is going to be another solid growth driver for the company, driving impressive growth in volumes in both compute and storage-memory chips. On its latest earnings conference call, Micron CEO Sanjay Mehrotra remarked: AI PCs require a higher capacity of memory and storage. As an example, leading PC OEMs have recently announced AI-enabled PCs with a minimum of 16GB of DRAM for the value segment and between 32GB to 64GB for the mid and premium segments, versus an average content across all PCs of around 12GB last year. A similar scenario is unfolding in the smartphone market, where Micron points out that Android original equipment manufacturers (OEMs) are launching AI smartphones with 12 gigabytes (GB) to 16GB of dynamic random access memory (DRAM), up from the average capacity of 8GB seen in 2023 flagship smartphones. IDC estimates that the market for generative AI smartphones could grow at an annual rate of 78% through 2028. On the other hand, Gartner estimates that AI PC shipments could jump a whopping 165% next year. The stunning growth of these end markets presents a bright multiyear opportunity for Micron to grow its sales and earnings thanks to the increase in memory consumption by AI-enabled edge devices, such as smartphones and PCs. All this indicates that Micron is a more diversified AI stock than Nvidia, as it stands to gain from the adoption of this technology in several ways beyond just data centers. Even better, Micron's forecast suggests that it is about to clock faster growth than its illustrious peer. Micron's guidance and valuation make it a top AI stock to buy right now Micron is coming off a terrific fiscal Q4 with remarkable growth in its top and bottom lines. The company expects the momentum to continue in fiscal 2025's Q1. It has guided for $8.7 billion in revenue in the current quarter along with adjusted earnings of $1.74 per share at the midpoint. The top-line guidance points toward an 85% year-over-year increase, while the bottom line would be a big improvement over the year-ago period's non-GAAP loss of $0.95 per share. For comparison, Nvidia is expecting its top line to grow 80% year over year in the current quarter. That was one of the reasons why investors pressed the panic button after its latest results as the chipmaker has been consistently delivering triple-digit growth in the past few quarters. What's more, Micron's valuation means that investors looking to add an AI stock to their portfolios right now would do well to buy it right away over Nvidia. Micron's forward price-to-earnings ratio of 11 is significantly lower than Nvidia's forward-earnings multiple of 44, making the former a no-brainer investment right now, considering its eye-popping growth.

Micron rises 19% on AI-driven forecast, fuels chip stock rally

Micron Technology surged close to 19% on Thursday, leading a rally in chip stocks after its strong revenue forecast signaled robust demand for the hardware used to power generative AI technology. The company, whose high-bandwidth memory chips (HBM) are used in Nvidia's popular artificial intelligence processors, could potentially add more than $19 billion to its market value. Strong demand for HBM chips has helped Micron offset inventory buildups in other areas such as the personal computer market. PC providers had earlier built up memory chip inventory in anticipation of higher prices, CEO Sanjay Mehrotra said on a post-earnings call on Wednesday. The company delivered its best quarterly revenue growth in a decade in the fourth quarter ended Aug. 29 and its forecast for the current period came widely above Wall Street estimates. Micron's earnings and forecast also lifted shares of Nvidia, Intel and Broadcom by more than 2%. Other chip firms, including AMD and Qualcomm and Arm Holdings were up over 3%. The Philadelphia Semiconductor Index rose more than 4%. "The firm (Micron) benefits from a broad and strong up-cycle in memory chip demand, aided by AI-related demand," Morningstar analysts said in a note. Strong pricing for HBM chips is expected to help Micron's gross margins, which were earlier pressured by an expensive ramp-up of its HBM manufacturing capacity. The company said it expects an adjusted gross margin of about 39.5% for the first quarter ending November, compared to estimates of 37.7%. It recorded an adjusted gross margin of 36.5% in the fourth quarter, a big jump from a negative 9.1% in the year-ago period. Strong gross margins from the company's HBM products helped drive overall margins higher, CEO Mehrotra said. The bar for Micron was relatively lower this earnings cycle, helping it outperform, Morgan Stanley analysts said. After Micron's last earnings report in June, nine of 26 analysts had lowered their estimates for the first-quarter revenue, per LSEG, amid fears that HBM pricing was weakening. Micron largely allayed those concerns, with Chief Financial Officer Matt Murphy attributing improved profitability in the fourth quarter to higher pricing.

Why Micron Stock Is Soaring Today | The Motley Fool

Continued growth of demand for artificial intelligence hardware is proving a boon for this memory chip company. Shares of computer technology outfit Micron Technology (MU 13.19%) are up more than 15% midday Thursday following Wednesday evening's release of its fiscal fourth-quarter results. The stock's biggest single-day gain in over a decade, however, mostly stems from its bullish guidance for the quarter currently underway. Micron Technology turned $7.75 billion worth of revenue into per-share operating earnings of $1.18 during the three-month stretch ending in late August. Both are well up from year-ago comparisons of a top line of $4.01 billion and a per-share loss of $1.07, although keep in mind the environment a year earlier was (very) cyclically weak. Perhaps more important, both of last quarter's numbers topped analyst expectations of $7.65 billion in sales and profits of $1.11 per share. Continued demand for its high-bandwidth memory chips used in artificial intelligence (AI) computing platforms gets most of the credit for the strong showing. This strength isn't expected to abate in the immediate future either. Micron's revenue guidance for the first quarter of fiscal 2025 now underway is $8.7 billion at the midpoint of the suggested range, versus analysts' consensus of only $8.27 billion. The company's also anticipating per-share earnings of $1.74 -- give or take $0.08 -- while analysts had been modeling an average of $1.52 per share. CEO Sanjay Mehrotra went on to say in Wednesday's fiscal Q4 press release, "We forecast record revenue in fiscal Q1 and a substantial revenue record with significantly improved profitability in fiscal 2025." The bullish response to the unexpectedly pleasant surprise is impressive, but also intimidating. See, it's not often a stock jumps 15% in a single session and then tacks on more immediate gains. And in this case, Thursday's surge has carried Micron shares to more than 30% above its early September low. The sheer scope of such a move combined with the gap left behind by today's opening leap makes it even tougher for the stock to continue rallying... at least not without taking some sort of break first. Just don't linger on the sidelines for too long if you're interested in owning a piece of this technology company. The stock's also still well below its June peak, and priced reasonably at only 12.6 times this fiscal year's earnings estimate of $8.79 per share. Indeed, continued demand for AI tech is expected to lead Micron Technology to a per-share profit of $12.91 next fiscal year. The stock's only trading at 8.5 times that figure, which is dirt cheap by almost any standard. The chief concern here for risk-tolerant growth investors is just the extreme volatility that's sure to persist.

Is Micron a Buy After Massive Earnings Topper?

It's easy to overlook the components that make our day-to-day technology function. For instance, I am writing this article on a program that isn't stored locally on my computer; it's in the cloud. The vast majority of software I use is like that. Online banking, payment processing, software, data storage, and a bushel of other functions run through the cloud, and the cloud runs through data centers. Artificial intelligence (AI) and machine learning (ML) exponentially increase processing and memory needs. Hyperscalers, like Meta Platforms, Alphabet, Microsoft, and Elon Musk's xAI, are building massive data centers that each house at least 5,000 cloud servers, all running 24/7. The recent explosion in the number of these larger centers is detailed below. The center total passed 1,000 in 2024, and research suggests more than 120 will come online annually for several years. Suppliers like Micron Technology (MU -3.28%) will benefit tremendously. Massive opportunity When discussing Micron, the talk focuses on memory -- specifically, DRAM (Dynamic Random Access Memory) and NAND (flash memory). At a basic level, DRAM functions as temporary storage while a device is in use, and NAND stores data permanently. Your smartphone and computers use both, and so do data centers. Data centers specifically require high-bandwidth memory (HBM), a high-performance DRAM type. Micron expects the demand for its HBM products to grow from $4 billion in 2023 to $25 billion in 2025. This is a massive opportunity for the company, but not the only one. Data centers also need a type of NAND memory called SSDs (solid-state drives). Micron hit a milestone last quarter with over $1 billion in revenue from its SSDs, tripling sales from the prior year. Micron is investing heavily in new plants to keep up with the sizzling demand. Micron's last quarter, fiscal Q4, was spectacular. The slide below is an excellent visual of the results. Growth soared in each quadrant, with fiscal year 2024 growth in DRAM of 60% and NAND of 72% being particularly impressive. Micron's results tend to be cyclical. It relies on consumer electronics (smartphones, etc.), businesses spending on computers, automotive demand, and data centers. Given the data center upcycle and the Federal Reserve's recent rate cut with hints of further cuts (which tend to spur economic growth and spending), Micron has significant tailwinds now. Is Micron stock a buy? Micron stock pulled back after a long run that began in early 2023 and it now trades 30% off its recent highs. Its current price-to-earnings ratio is sky-high; however, the ratio drops to just 12 on a forward basis, as shown below. MU PE Ratio data by YCharts The average price-to-earnings ratio from the beginning of 2019 through the end of 2020 was 18, suggesting that the stock has room to climb, given the growth expectations and headwinds detailed above. The cyclical nature of the stock and a major slowdown in the economy are the largest risks. Analysts are also bullish. The average price target is $156, 45% higher than the current price, and a forward P/E all the way up to 28 of 29 rates it as a buy or strong buy. Last quarter's results confirmed the enthusiasm and next year looks even better. Micron has the makings to be a terrific investment.

Micron Technology sees largest gain in nearly 13 years

Micron Technology Inc., the largest US maker of computer memory chips, gained the most in nearly 13 years after giving surprisingly strong sales and profit forecasts, helped by demand for artificial intelligence gear. 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. Profit will be about $1.74 a share, minus certain items, versus a projection of $1.52. The rosy 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 more rapid access to massive pools of information. Demand has been outpacing supply, letting Micron boost prices and secure long-term guaranteed contracts. It's already sold out of the product for 2024 and 2025, the company said Wednesday. The shares rose 15% at $109.88 in New York trading, their biggest single-day gain since December 2011. The stock is up 29% this year. Results from Micron's fiscal fourth quarter also handily beat estimates. Revenue increased 93% to $7.75 billion in the period, which ended Aug. 29. Excluding certain items, profit was $1.18 per share. On average, analyst had estimated a profit of $1.12 a share and revenue of $7.66 billion. Micron has an edge because it's 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 also is emerging from a slowdown in demand for personal computers and smartphones, two of the biggest markets for memory. Device shipments are now growing again, Micron said. Those devices will increasingly feature AI functionality that requires more memory chips to work properly, adding a further benefit, Bhatia said. Micron makes dynamic random access memory, or DRAM, a type of chip that temporarily holds information and works alongside processors from companies such as Nvidia Corp. and Intel Corp. It also make Nand flash memory -- semiconductors that store information in everything ranging from data-center computers to smartphones. "Robust AI demand drove a strong ramp of our data center DRAM products," Chief Executive Officer Sanjay Mehrotra said in the statement. "We are entering fiscal 2025 with the best competitive positioning in Micron's history." The company is one of only a handful that have survived the industry's brutal boom-and-bust cycles over the devices. Those swings in demand have made it difficult maintain consistent profits, but the company has been emerging from the latest downturn. The chipmaker competes with South Korea's Samsung Electronics Co. and SK Hynix Inc. in the memory market.

Micron fuels chip stock rally as AI demand powers revenue forecast

(Reuters) - Micron Technology surged 15% on Thursday in premarket trading, leading a rally in chip stocks after its strong revenue forecast signaled robust demand for semiconductors used to power generative AI technology. The company, whose high-bandwidth memory chips (HBM) are used in Nvidia's popular artificial intelligence processors, was set to add more than $17.5 billion to its market value. Strong demand for HBM chips has helped Micron offset inventory buildups in other areas such as the personal computer market. The company delivered its best quarterly revenue growth in a decade in the fourth quarter ended Aug. 29 and its forecast for the current period was widely above Wall Street estimates. The earnings also lifted shares of Nvidia and Broadcom by more than 1.5%. Other chip firms, including AMD and Intel, were up close to 2.5%. "The firm (Micron) benefits from a broad and strong up-cycle in memory chip demand, aided by AI-related demand," Morningstar analysts said in a note. Strong pricing for HBM chips is expected to help Micron's gross margins, which were earlier pressured by an expensive ramp-up of its HBM manufacturing capacity. The company said it expects adjusted gross margin of about 39.5% for the first quarter ending November, compared to estimates of 37.7%. It recorded an adjusted gross margin of 36.5% in the fourth quarter, a big jump from a negative 9.1% in the year-ago period. Strong gross margins from the company's HBM products helped drive overall margins higher, CEO Sanjay Mehrotra said on a post-earnings call on Wednesday. The bar for Micron was relatively lower this earnings cycle, helping it outperform, Morgan Stanley analysts said. After Micron's last earnings report in June, nine of 26 analysts had lowered their estimates for the first-quarter revenue, per LSEG, amid fears that HBM pricing was weakening. Micron largely allayed those concerns, with Chief Financial Officer Matt Murphy attributing improved profitability in the fourth quarter to higher pricing. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Janane Venkatraman)

Micron's Post-Earnings Pop Leads Other Chip Stocks Higher

Shares of Micron were up over 12% in intraday trading, while shares of partner Nvidia (NVDA) also gained before reversing course. Advanced Micro Devices (AMD), Broadcom (AVGO), and Taiwan Semiconductor Manufacturing Company (TSM) rose as well, boosting the tech-heavy Nasdaq. Nvidia, Micron, and other chip companies have seen their revenue and stock prices climb amid a boom in demand for infrastructure to support artificial intelligence (AI). Micron CEO Sanjay Mehrotra said Wednesday the company's fiscal fourth-quarter sales nearly doubled from a year ago to $7.75 billion, driven by "robust AI demand." Mehrotra also said the company's sales are expected to continue growing, projecting current-quarter revenue could reach a record high between $8.5 billion to $8.9 billion.

Tech Up After Micron Earnings -- Tech Roundup

Shares of technology companies rose after strong earnings for one key chip maker. Micron Technology shares surged, registering their biggest gain since 2011, after it reported that growing demand for AI-related data center applications offset weakness in market segments such as personal computers and mobile devices, alleviating concerns about an inventory pileup in the cyclical memory-chip business. Nvidia, the largest maker of chips for AI applications, came within 10% of all-time highs and crossed the $3 trillion market-capitalization barrier before gains moderated late in the session. Super Micro Computer, the server maker that saw its business take off with the AI boom, plunged after reports it was being probed by the Justice Department following a report from activist short-selling firm Hindenburg Research accusing it of accounting shenanigans.

Micron's Post-Earnings Pop Leads Nvidia and Other Chip Stocks Higher

Nvidia, Micron, and other chip companies have seen their revenue and stock prices climb amid a boom in demand for infrastructure to support artificial intelligence (AI). Micron CEO Sanjay Mehrotra said Wednesday the company's fiscal fourth-quarter sales nearly doubled from a year ago to $7.75 billion, driven by "robust AI demand." Mehrotra also said the company's sales are expected to continue growing, projecting current-quarter revenue could reach a record high between $8.5 billion to $8.9 billion.

Live news: Chipmaker Micron's shares jump as AI demand boosts outlook

Micron released a rosy sales outlook for the current quarter, signalling strong demand for semiconductors that power artificial intelligence software. The Idaho-based chipmaker said it expected profits between $1.46 and $1.60 a share on sales between $8.5bn and $8.9bn in its fiscal first quarter, exceeding Wall Street's expectations. Its shares rose 12 per cent in extended trading. The company's revenue and profit last quarter largely aligned with analysts' estimates. "We are entering fiscal 2025 with the best competitive positioning in Micron's history," said chief executive Sanjay Mehrotra, adding he expected "significantly improved profitability in fiscal 2025".

Micron forecasts upbeat first-quarter revenue on strong demand for memory chips

Micron Technology forecast first-quarter revenue above Wall Street estimates on Wednesday, betting on strong demand for its high bandwidth memory (HBM) chips used by the AI industry, sending the company's shares up 10% after the bell. The company is one of the only three providers of HBM chips along with South Korea's SK Hynix and Samsung, which has allowed the U.S. firm to cash in on demand for semiconductors that help power generative AI technology. The AI boom has also helped Micron cushion the hit from a memory chip inventory glut in PC and smartphone markets. The company forecast revenue of $8.70 billion, plus or minus $200 million, for the first quarter, compared with estimates of $8.28 billion, according to LSEG data. Micron's results typically set the tone for the chip sector as it reports ahead of peers and serves a broad client base spanning the PC, data center and smartphone industries. The company said in June its HBM chips were sold out for the 2024 and 2025 calendar years. The chips are used in the AI processors designed by Wall Street darling Nvidia. Micron expects adjusted gross margin for the first quarter to be 39.5%, plus or minus 1%. Analysts had expected an adjusted gross margin of 37.7%. For the fourth quarter, the company's revenue jumped 93% to $7.75 billion.