Micron’s stock surged over 12% following a strong first-quarter earnings report and optimistic outlook, driven by soaring demand for its memory chips, particularly those essential for artificial intelligence applications. The memory giant not only surpassed Wall Street’s expectations but also provided guidance that significantly outpaced consensus estimates, signaling a robust future for the company.
During its earnings call, Micron executives highlighted the substantial growth in data center demand as a key driver for its products. The company projects the total addressable market for high-bandwidth memory (HBM) to reach an impressive $100 billion by 2028, reflecting a compelling 40% compound annual growth rate. To meet this escalating demand, Micron has also increased its capital expenditure guidance to $20 billion, up from a previous $18 billion.
“We are more than sold out,” stated Sumit Sadana, Micron’s chief business officer, during the call. “We have a significant amount of unmet demand in our models, and this is consistent with an environment where demand is substantially higher than supply for the foreseeable future.” This shortage, coupled with strong demand, suggests a favorable pricing environment for memory manufacturers.
Micron reported adjusted earnings per share of $4.78 on revenue of $13.64 billion for the fiscal first quarter. This performance exceeded LSEG’s consensus estimates of $3.95 per share and $12.84 billion in revenue.
Looking ahead, Micron anticipates revenues to reach approximately $18.70 billion in the current quarter, a significant leap from the $14.20 billion projected by LSEG. The company also forecasts adjusted earnings per share to hit $8.42, far exceeding the $4.78 expectation.
The impressive results and outlook have garnered positive attention from Wall Street analysts. JPMorgan raised its price target on Micron shares, citing the favorable pricing dynamics, while Bank of America upgraded its rating to “buy.” Morgan Stanley remarked that the company’s revenue and net income upside in this quarter was among the best ever seen in the U.S. semiconductor industry, excluding Nvidia’s performance.
Analysts at Morgan Stanley further commented on the broader market implications: “If AI keeps growing as we expect, we believe that the next 12 months are going to have broader coat tails to the AI trade than just the processor names, and memory would be the biggest beneficiary.” This sentiment underscores the strategic importance of memory components within the rapidly expanding AI ecosystem.
Micron’s performance highlights a significant shift in the semiconductor landscape, where the demand for advanced memory solutions, especially for AI workloads, is outstripping supply. This imbalance, coupled with strategic capacity expansions by key players like Micron, is expected to shape the industry’s trajectory for years to come.
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