Micron technology Inc., the largest U.S. maker of computer memory chips, posted its biggest gain in nearly 13 years after giving stronger-than-expected sales and profit forecasts, helped by demand for artificial intelligence devices.
Revenue in the first fiscal quarter will be about $8.7 billion, the company said in a statement Wednesday. This compares to an average analyst estimate of $8.32 billion. Earnings will be about $1.74 per share, excluding certain items, versus a forecast 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 opened up a lucrative new revenue stream for the company and other chipmakers. The technology helps develop AI systems by providing faster access to vast pools of information.
Demand exceeds supply, allowing Micron to raise prices and secure long-term, guaranteed contracts. The product for 2024 and 2025 has already been sold out, the company announced on Wednesday.
Shares rose 15% to $109.88 in New York trading, their biggest daily gain since December 2011. The stock is up 29% this year.
Micron’s fourth quarter results also significantly exceeded estimates. Revenue rose 93% to $7.75 billion in the period ended Aug. 29. Excluding certain items, earnings were $1.18 per share. On average, analysts had estimated earnings 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 volume,” Manish Bhatia, executive vice president of operations, said in an interview. As companies struggle to improve their AI software and hardware — and use more memory in the process — Micron is in a good position, he said.
The chipmaker is also recovering from a decline in demand for PCs and smartphones, two of the biggest markets for memory. Device shipments are now picking up again, Micron said. These devices will increasingly have AI capabilities that require more memory chips to function properly, which is another advantage, Bhatia said.
Micron makes dynamic random access memory (DRAM), a type of chip that temporarily stores information and works with processors from companies like Nvidia Corp. and Intel Corp. also makes NAND flash memory – semiconductors that store information in everything from data center computers to smartphones.
“Demand for robust AI drove a surge in our data center DRAM products,” Chief Executive Officer Sanjay Mehrotra said in the statement. “We enter fiscal year 2025 with the best competitive position in Micron’s history.”
The company is one of the few companies that has survived the industry’s brutal device boom-and-bust cycles. These fluctuations in demand have made it difficult to generate consistent profits, but the company has overcome the recent downturn. The chip manufacturer competes with the South Korean one Samsung Electronics Co. and SK Hynix Inc. in the memory market.
(Updates with closing price in fifth paragraph.)
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