Micron Sees $8.7 Billion Q1 Revenue on Strong HBM Demand

Micron Technology's stock soared approximately 14% in after-hours trading following the company's forecast of higher-than-expected revenues for the first fiscal quarter, driven by robust demand for memory chips used in artificial intelligence (AI) computing. As one of only three high-bandwidth memory (HBM) chip suppliers—alongside SK Hynix and Samsung—Micron is positioned to capitalize on the growing demand for semiconductors essential to advancing generative AI technologies.

HBM is a space-saving, energy-efficient type of dynamic random-access memory (DRAM) crucial for AI-focused graphics processing units, enabling the processing of large data volumes. CEO Sanjay Mehrotra noted during a recent analyst call that demand from data center clients remains strong, with healthy inventory levels reported.

In June, Micron announced that its HBM chip sales for 2024 and 2025 are fully booked, with pricing confirmed. The company projects first-quarter revenues to reach a record approximately $8.7 billion, with gross margins expected to rise to around 39.5%. Analysts from the London Stock Exchange anticipate first-quarter revenues of $8.28 billion, with an adjusted gross margin of 37.7%.

The AI boom has also helped Micron mitigate the impact of excess memory chip inventory in the personal computer and smartphone markets. Analysts predict that PCs integrated with AI technology will require significantly more memory chips, aiding the growth of companies like Micron. Kinngai Chan, a senior research analyst at Summit Insights, indicated that DRAM requirements for AI PCs could increase by over 30%. Additionally, Microsoft's push for users to transition from older versions to Windows 11 may further expand the market, particularly for commercial PCs in 2025.

Micron's performance typically sets the tone for the semiconductor industry, given its early financial reporting compared to peers and its diverse clientele across PC, data center, and smartphone sectors. Sumit Sadana, Micron's Chief Business Officer, highlighted that HBM, high-capacity memory, and data center flash will each contribute billions in revenue by 2025.

For the first quarter, the company forecasts adjusted earnings per share of $1.74, with an allowance of 8 cents, surpassing analyst expectations of $1.65.