© Reuters. FILE PHOTO: The company logo is seen on the Micron Technology Inc. offices in Shanghai, China May 25, 2023. REUTERS/Aly Song/File Photo
By Arsheeya Bajwa and Max A. Cherney
(Reuters) -Micron Technology forecast quarterly revenue above market estimates on Wednesday, and its shares jumped nearly 5% in extended trading on signs of memory chip recovery in 2024 after one of the most significant downturns in years.
Demand for flash storage and dynamic random access memory (DRAM) should keep improving next year, while at the same time the supply levels of the chips will begin to approach historically normal levels, the memory chipmaker said.
Memory prices, which slumped this year, will improve next year and rise further in 2025, Micron (NASDAQ:) CEO Sanjay Mehrotra said in a conference call.
Micron forecast revenue of $5.3 billion, plus or minus $200 million, for the second quarter, compared with estimates of $5.03 billion, according to LSEG data.
Micron said it expects the supply of chips for PCs, mobile devices and other chips to approach normal levels in the first half of next year.
Businesses have begun to incorporate generative artificial intelligence into various products and services that has boosted demand for Micron’s high-bandwidth memory chips, which are necessary to train large language models that form the foundation of AI tech.
“Demand for AI servers has been strong as data center infrastructure operators shift budgets from traditional servers to more content-rich AI servers,” Micron
Data center operators are shifting purchases to AI chips that require more member from traditional servers, Mehrotra said.
On an adjusted basis, the company expects a loss of 28 cents per share, plus or minus 7 cents, for the second quarter, compared with estimates of a loss of 62 cents per share.
Micron’s results reflect the beginning of a recovery in the memory market for memory and flash storage.
Rival SK Hynix has supplied AI giant Nvidia (NASDAQ:). Mehrotra said Micron is in the final stages of qualifying for its HBM3E chips to be used in Nvidia’s next generation Grace Hopper GH200 and H200 platforms.
Micron expects “several hundred million” dollars worth of high-bandwidth memory revenue in fiscal 2024, and continued growth of such revenue in 2025.
Earnings of major chipmakers Intel (NASDAQ:) and Advanced Micro Devices (NASDAQ:) offered evidence of a recovery in PC demand gathering pace following a post-pandemic supply glut.