Micron forecasts quarterly revenue above estimates

June 24 : Micron Technology forecast quarterly earnings above Wall Street estimates on Wednesday, signaling heavy investments in AI-related infrastructure will drive strong demand for memory chips and sending shares up more than 15 per cent in extended trading.

The company expects fourth-quarter revenue of $50 billion, plus or minus $1 billion, compared with analysts' average estimate of $43.58 billion, according to data compiled by LSEG.

The results and forecast show how the explosive growth of generative AI has turned products such as high-bandwidth memory (HBM) into critical components for large-scale data centers.

The strong results add to a stock rally that allowed Micron to enter the elite $1 trillion club earlier this year on the back of its memory chip business.

The stock has surged more than threefold this year, despite a 13 per cent plunge on Tuesday as part of a broader selloff.

SUPPLY CONSTRAINTS TO LAST

Micron, a key supplier for Nvidia's AI processors, has benefited as AI chip and server makers rush to secure a limited supply.

Micron, the only U.S.-based manufacturer of high-end memory chips, has seen demand for its HBM chips far outstrip its production capacity, and analysts expect demand to exceed supply for the next two to three years.

"The size and scale of the AI build out has been underestimated at every turn and memory will continue to command premium pricing on supply constraints," said Daniel Newman, CEO of tech research firm Futurum Group.

Major memory chip makers are prioritizing high-bandwidth memory to meet AI demand, leaving consumer electronics makers scrambling to secure conventional memory and driving prices of products higher.

"We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments coupled with structural supply constraints," Micron CEO Sanjay Mehrotra said in the company's prepared remarks.

"Even as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand," he added.

SPENDING RAMPS

Micron said it intends to increase its capital return, while it invests heavily in expanding infrastructure to satisfy soaring demand.

The company expects fourth-quarter capital expenditure of around $10 billion, while analysts expect spending of $8.89 billion.

Big Tech firms are expected to spend more than $700 billion on AI infrastructure this year, up from around $400 billion in 2025.

It reported third-quarter revenue of $41.46 billion, flying past estimates of $35.85 billion.

The company reported adjusted profit of $25.11 per share, compared with estimates of $20.78 per share.

Micron expects fourth-quarter adjusted earnings per share of $31, plus or minus $1, compared with the estimates of $25.84 per share.