Micron Technology, the largest U.S. maker of computer memory chips, posted its biggest gain in nearly 13 years after delivering a surprisingly strong forecast for sales and profits, boosted by demand for artificial intelligence equipment.
The company said in a statement on Wednesday that fiscal first-quarter revenues will amount to about $8.7 billion. This compares to analysts’ average estimate of $8.32 billion. Earnings would be about $1.74 per share, minus certain items, versus an expectation of $1.52.
The rosy forecast is the latest sign that Micron is benefiting from a boom in AI spending. Orders for a type of product called high-bandwidth memory have added a lucrative new revenue stream for the company and other chipmakers. This technology helps develop artificial intelligence systems by providing faster access to huge sets of information.
Demand was outstripping supply, allowing Micron to boost prices and secure guaranteed long-term contracts. The product has already been sold for 2024 and 2025, the company said on Wednesday.
Shares rose 15% to $109.88 in New York trading, their biggest single-day gain since December 2011. The stock is up 29% this year.
Micron’s fiscal fourth-quarter results also easily beat estimates. Revenues increased 93% to $7.75 billion in the period ending August 29. Excluding some items, profit was $1.18 per share. On average, analysts estimate earnings of $1.12 per share and revenue of $7.66 billion.
Micron has an advantage because it is the first chipmaker to reliably deliver more advanced memory in high volume, Executive Vice President of Operations Manish Bhatia said in an interview. As companies race to beef up their AI software and hardware — and use more memory in the process — Micron is well positioned, he said.
The chipmaker is also emerging from a slowdown in demand for personal computers and smartphones, two of its largest memory markets. Device shipments are now growing again, Micron said. These devices will increasingly feature artificial intelligence functions that require more memory chips to function properly, adding another benefit, Bhatia said.
Micron makes dynamic random access memory, or DRAM, a type of chip that temporarily holds information and works alongside processors from companies like Nvidia Corp. and Intel Corp. It also makes Nand flash memory, a semiconductor that stores information in everything from data to data. Computer Center for Smartphones.
“Strong demand for AI has led to a strong increase in our data center DRAM products,” Sanjay Mehrotra, CEO, said in the statement. “We enter fiscal 2025 in the best competitive position in Micron’s history.”
The company is one of the few to have survived the industry’s harsh boom and bust cycles on hardware. These fluctuations in demand have made it difficult to maintain steady profits, but the company has emerged from the recent downturn. The chipmaker competes with South Korea’s Samsung Electronics and SK Hynix in the memory market.
(Updates with closing price in fifth paragraph.)
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