Micron Technology reported higher-than-expected third-quarter revenue on Wednesday, driven by strong demand for its memory chips amid the AI boom. However, its forecast for the current quarter did not meet investors’ elevated expectations, causing a 7.2% drop in its stock price during extended trading. Despite a 13% rise in Micron’s shares this month, fueled by optimism about AI-driven demand, the latest forecast tempered investor enthusiasm.
“Micron’s largely in-line forecast might have been sufficient a few months ago, but it falls short of the current high expectations, especially after a significant 67% rise in its share price this year,” commented Michael Schulman, Chief Investment Officer at Running Point Capital. Ben Bajarin, an analyst at Creative Strategies, noted that the after-hours stock movement was primarily due to the weaker-than-anticipated forecast.
Micron projected fourth-quarter revenue to be approximately $7.6 billion, plus or minus $200 million, aligning with market expectations based on LSEG data. The company, a key supplier of high-bandwidth memory chips for advanced AI systems, has benefited from the surge in demand for these semiconductors.
Micron’s quarterly results often serve as a bellwether for the chip industry, reflecting demand trends across various chip types and end markets. “We are very optimistic because, after Nvidia, Micron has a significant exposure to AI growth,” said Sumit Sadana, Micron’s Chief Business Officer, in an interview.
Media reports indicate that Apple is in discussions with Meta, the parent company of Facebook, about integrating its AI model. Micron revealed that its high-bandwidth memory (HBM) chips are fully booked for the 2024 and 2025 calendar years. These chips are crucial for AI processors designed by Nvidia, a prominent player in the AI sector.
For the third quarter, Micron reported revenue of $6.81 billion, surpassing the $6.67 billion estimate according to LSEG data. Following Micron’s earnings report, shares of Nvidia, Advanced Micro Devices, and Intel experienced slight declines.
