Micron Gives Upbeat Forecast, Lifted by AI Computing Demand | Company Business News

(Bloomberg) — Micron Technology Inc., Wall Street’s favorite chipmaker this year, gave an upbeat forecast for the current quarter, helped by demand for artificial intelligence equipment.

Though the company posted third-quarter results and a fourth-quarter forecast that exceeded estimates, the stock pared gains in late trading after a conference call with executives. 

A key focus was high-bandwidth memory, a component used in artificial intelligence computing. The technology is fueling a sales surge at Micron, but the company didn’t predict the kind of runaway growth that some investors were looking for. 

The sales gains “while impressive, still roughly parallel our prior expectations,” Matt Bryson, an analyst at Wedbush Securities, said in a note. 

After initially gaining as much as 7.7% following the release of Micron’s earnings report on Wednesday, the stock briefly turned negative. It rose 2% in premarket trading on Thursday.

High-bandwidth memory, or HBM, has become the star of Micron’s business. It’s used in machines that develop and run AI tools. The company expects continued growth from that market as such software becomes more complex, requiring bigger amounts of memory. The company is also starting to recover from narrower profit margins in the previous quarter.

On the conference call, analysts peppered Chief Executive Officer Sanjay Mehrotra with questions about HBM, trying to get a sense of how much growth is coming.

Fiscal fourth-quarter revenue will be roughly $10.7 billion, the company said. That was well ahead of the $9.89 billion average analyst estimate. Profit will be around $2.50 a share, excluding certain items, compared with a projection of $2.03.

Sales rose 37% to $9.3 billion in the fiscal third quarter, which ended May 29. Analysts had estimated $8.85 billion. Earnings were $1.91 a share, excluding some items, compared with an average prediction of $1.60.

In addition to pursuing more AI revenue, Boise, Idaho-based Micron is looking to sell more memory to other areas, such as electric vehicles and gaming chips, according to Dan Morgan, senior portfolio manager at Synovus, said in an earlier note.

The growth prospects had turned Micron into the chip industry’s hottest stock this year, with the shares gaining 51% through Thursday’s close.

–With assistance from Ian King.

(Updates with premarket shares and additional context)

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