Micron (MU) stock rose 14% in after-hours trading Wednesday as the chipmaker forecast higher-than-expected revenue for the upcoming quarter.
Micron forecast first-quarter revenue of $8.5 billion to $8.9 billion, above the $8.3 billion analysts had expected.
Company executives attributed the higher guidance to a more favorable pricing environment as well as strong demand for memory chips that Micron uses in data centers to power artificial intelligence.
“With the advent of AI, we are in the most exciting period I’ve seen in memory and storage in my career,” CEO Sanjay Mehrotra said during a call with investors Wednesday afternoon. The company enters fiscal 2025 “in the best competitive position in Micron’s history,” Mehrotra added.
Micron is the first chipmaker to report quarterly results this earnings season, and its report offers a first look at how the semiconductor sector is performing amid high expectations from Wall Street.
The company reported revenue of $7.75 billion for its fiscal fourth quarter ended Aug. 29 — up 93% from a year ago and topping the $7.66 billion expected by analysts, who recently lowered their forecasts. Adjusted earnings per share of $1.18 also beat both the top range of Micron’s guidance and Wall Street’s forecast of $1.11.
Micron's memory chip business has seen a major upswing over the past year as big tech companies pour billions of dollars into the semiconductor sector for hardware to power AI data centers.
Micron is unique in that it partners with chip giant Nvidia (NVDA), rather than competing with it. Micron supplies memory chips for graphics processing units, which are in high demand from Nvidia.
Investors have incredibly high and ever-increasing standards for AI chipmakers, which has often left them disappointed in recent months. Micron’s third-quarter earnings did little to impress investors in late June, and shares fell on its fourth-quarter outlook, which came in right in line with (rather than beat) Wall Street expectations. Nvidia also fell after reporting quarterly earnings in late August. Despite doubling earnings and beating sales expectations, investors wanted more from the semiconductor superpower.
Nvidia shares have since recovered, and Micron's fourth-quarter results lifted its stock after a disappointing few months, which saw shares fall from highs in the $150 range in mid-June.
The PHLX Semiconductor Index (^SOX) has begun to recover from a decline earlier in the month as technology stocks rebound in the wake of the U.S. Federal Reserve’s massive interest rate cut and China’s central bank’s sweeping stimulus package. The index is up about 6% over the past week.
Laura Bratton is a reporter at Yahoo Finance.
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