Micron stock soars as demand for AI memory soars

micron technologyThe company’s stock rose 12% after the company signaled strong demand for its memory chips and significantly beat expectations for its fiscal first quarter.

Micron, which makes memory storage used in computers and artificial intelligence servers, said on an earnings call with analysts that data center needs are driving increased demand for its products.

Micron said it expects the total market size for high-bandwidth memory to reach $100 billion by 2028, growing at a compound annual growth rate of 40%. Management also raised its capital expenditure outlook from $18 billion to $20 billion.

“We’re more than sold out,” said business director Sumit Sadhana. “There is a significant amount of unmet demand in our model, which is consistent with an environment where demand will significantly exceed supply for the foreseeable future.

Micron beat Wall Street’s expectations for its fiscal first quarter and issued a blowout forecast.

The company reported adjusted earnings of $4.78 per share and revenue of $13.64 billion, beating LSEG’s expectations for earnings of $3.95 per share and revenue of $12.84 billion.

Revenue for the quarter is expected to reach about $18.7 billion, higher than LSEG’s estimate of $14.2 billion. Adjusted earnings are expected to be $8.42 per share, compared to expectations of $4.78.

Following the results, JPMorgan raised its price target on the stock, citing favorable pricing, and Bank of America raised its rating on the stock to “buy.”

Morgan Stanley called the results the best sales and net profit gains in “the history of the U.S. semiconductor industry” other than Nvidia.

“If AI continues to grow as we expect, we believe the next 12 months will have a broader impact on the AI ​​industry, beyond processor names and memory being the biggest beneficiaries,” the analysts wrote.

Watch: Micron stock soars after better-than-expected quarterly results