Micron Technology (MU) saw its stock price surge by 14% in after-hours trading on Wednesday following an optimistic revenue forecast for the upcoming quarter.
The semiconductor company anticipates first-quarter revenues between $8.5 billion and $8.9 billion, exceeding analysts’ expectations of $8.3 billion. Executives attributed the revised guidance to improved pricing conditions and strong demand for Micron’s memory chips, particularly those utilized in data centers to support artificial intelligence (AI) applications.
CEO Sanjay Mehrotra expressed excitement about the current landscape, stating during an investor call, “With the advent of AI, we are in the most exciting period I have seen for memory and storage in my career.” He emphasized that Micron is entering fiscal year 2025 with “the best competitive positioning in Micron’s history.”
As the first chipmaker to report quarterly results this earnings season, Micron’s performance offers valuable insights into the semiconductor sector amid Wall Street’s high expectations.
In its fiscal fourth quarter, which concluded on August 29, Micron reported revenue of $7.75 billion—an impressive 93% increase year-over-year and surpassing the $7.66 billion that analysts had predicted. Adjusted earnings per share came in at $1.18, exceeding both the high end of Micron’s guidance and the $1.11 forecast from Wall Street.
Over the past year, Micron’s memory chip segment has experienced a resurgence as major technology companies invest heavily in the semiconductor industry to support their AI data center operations. Notably, Micron collaborates with industry leader Nvidia (NVDA), supplying memory chips for Nvidia’s highly sought-after graphics processing units (GPUs).
Investor expectations for AI chipmakers have been soaring, often leading to disappointment. Despite Micron’s impressive third-quarter earnings report in late June, the stock price suffered due to a fourth-quarter outlook that merely met Wall Street expectations. Similarly, Nvidia faced a decline in its stock price after reporting strong quarterly results at the end of August, despite doubling profits and beating sales forecasts, as investor expectations remained high.
Following a recent rebound in Nvidia’s stock and the positive reception of Micron’s fourth-quarter results, the latter’s shares have recovered after several months of decline from mid-June highs of around $150.
The PHLX Semiconductor Sector Index (^SOX) has begun to bounce back after a dip earlier this month, buoyed by a rally in tech stocks following significant interest rate cuts by the U.S. Federal Reserve and a comprehensive stimulus package from China’s central bank. Over the past week, the index has gained nearly 6%.
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