Micron (MU) shares jumped 14% after the close on Wednesday as the chipmaker forecast higher-than-expected revenue for the next quarter.
Micron forecast first-quarter revenue of $8.5 billion to $8.9 billion, higher than the $8.3 billion analysts had expected.
Company executives attributed the revised forecast to a more favorable pricing environment and strong demand for Micron’s memory chips used in data centers to power artificial intelligence.
“With the advent of artificial intelligence, we are in the most exciting period I have seen in memory and storage in my career,” CEO Sanjay Mehrotra said on a conference call with investors Wednesday afternoon. Mehrotra said the company is entering fiscal 2025 with “the strongest competitive positioning in Micron’s history.”
Micron is the first chipmaker to report quarterly results this earnings season, and its report provides an early look at how the semiconductor industry is faring amid strong expectations from Wall Street.
The company reported revenue of $7.75 billion in its fiscal fourth quarter ended Aug. 29, up 93% from a year ago and topping the $7.66 billion expected by analysts, who had recently lowered their expectations. Adjusted earnings per share of $1.18 also beat both the high end of Micron’s forecast and Wall Street’s $1.11 forecast.
Micron’s memory chip business has seen renewed interest over the past year as big tech companies pour billions into the semiconductor sector for hardware to power AI data centers.
Micron stands out for its partnership with industry superpower Nvidia (NVDA), rather than its competition. Micron supplies memory chips for Nvidia’s highly sought-after GPUs.
Investors have extremely high and rising expectations for AI chipmakers, which has often disappointed them in recent months. Micron’s third-quarter earnings beat in late June failed to resonate with investors, and shares fell on its fourth-quarter outlook, which was right in line with Wall Street’s expectations (rather than beating them). Nvidia’s stock also fell after reporting quarterly results in late August. Despite more than doubling profits and beating sales expectations, investors had expected more from the semiconductor superpower.
Nvidia’s stock has since rebounded, and Micron’s fourth-quarter results sent its stock higher after a disappointing few months that saw shares fall from mid-June highs of $150.
The PHLX Semiconductor Sector Index (^SOX) has started to recover from a decline earlier this month as technology stocks rebounded after the U.S. Federal Reserve cut interest rates sharply and China’s central bank’s massive stimulus package. The index is up nearly 6% over the past week.
Laura Bratton is a reporter for Yahoo Finance.
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