shares are surging in late trading Wednesday after the memory chip maker posted results for its fiscal second quarter ended Feb. 29 that soared past expectations. May quarter guidance likewise blew past previous Street estimates.
And for that, you can thank AI.
Micron shares are 15% higher at $110.73 in after-hours trading.
Micron is one of the world’s leading providers of memory chips. It doesn’t compete with the likes of
and
which make the processors that provide the computing power behind AI. Instead, it benefits indirectly from the ravenous memory demands of generative AI applications.
Micron expects to see continued soaring demand in coming quarters for “high bandwidth memory,” or HBM—parts that combine multiple DRAM chips to improve data-processing speeds. And the company sees growing demand for memory for AI servers, AI PCs and AI phones.
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For the February quarter, Micron reported revenue of $5.82 billion, up 58% from the year earlier quarter, and well above the $5.3 billion the company had projected. On an adjusted basis, Micron posted a surprise profit of 42 cents a share—the company had projected a loss of 28 cents. Under generally accepted accounting principles, the company earned 71 cents a share. Non-GAAP gross margin in the quarter was 20%, nicely ahead of the company’s forecast of 13%.
Micron noted that it returned to profitability a quarter ahead of its own expectations.
For the May quarter, Micron is projecting revenue of $6.6 billion, give or take $200 million, with adjusted profits of 45 cents a share, plus-or-minus 7 cents. Street estimates as tracked by
had called for revenue of $5.98 billion and a profit of 8 cents.
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“Micron delivered fiscal Q2 results with revenue, gross margin and EPS well above the high-end of our guidance range—a testament to our team’s excellent execution on pricing, products and operations,” CEO Sanjay Mehrotra said in a statement. “Our pre-eminent product portfolio positions us well to deliver a strong fiscal second half of 2024. We believe Micron is one of the biggest beneficiaries in the semiconductor industry of the multiyear opportunity enabled by AI.”
In remarks prepared for the company’s call with analysts, Mehrotra noted that the company saw “robust price increases” as the supply-demand balance tightened or both NAND and DRAM chips. The company said the improved dynamic reflected multiple factors, including “strong AI server demand.” As the Street had anticipated, he said the company is seeing “rapid growth” in demand for HBM for AI applications.
Mehrotra said the company expects prices to further increase for both NAND and DRAM throughout 2024, while adding that the company expects record revenue “much improved profitability” in fiscal 2025.
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“We are in the very early innings of a multiyear growth phase driven by AI as this disruptive technology will transform every aspect of business and society,” he said. “The race is on to create artificial general intelligence, or AGI, which will require ever-increasing model sizes with trillions of parameters,” and as a result more and more memory.
Mehrotra expects data center server shipments to grow in the mid-to-high single digits in calendar 2024, driven by AI. He notes that the company’s supply of HBM is sold out for calendar 2024, with most of the 2025 supply already allocated as well. The company noted that its HBM3E chips are used in Nvidia’s H200 Tencor Core chips, and that the company is “making progress” on qualifying on additional platforms from multiple customers. The Micron CEO said the company will have “several hundred million dollars” of revenue from HBM in FY 2024.
Micron expects PC unit volumes to be up in the low single digit range in calendar 2024 after two years of double-digit declines. The company expects that it should get a boost from the emergence of AI PCs, which Micron says will have 40% to 80% more DRAM content from current PCs.
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Micron sees calendar 2024 mobile phone units growing in the low-to-mid single digits. The company said that AI phones will require 50% to 100% greater DRAM content than non-AI leading phones today.
The company noted that DRAM revenue in the latest quarter was $4.2 billion, up 21% sequentially, largely driven by a “high teens” increase in pricing. NAND revenue was $1.6 billion in the quarter, up 27% sequentially, aided by a better than 30% rise in pricing.
Write to Eric J. Savitz at eric.savitz@barrons.com
