Key points:

  • The company’s shares soared more than 16% after releasing a strong earnings report and guidance.
  • Demand for Micron memory chips is driven by the AI boom. Micron has already sold out of HBM chips for 2024 and most of 2025.
  • Nvidia, a leader in AI chips, will use HBM 3E in its next generation GPUs.

Amid the global hype about artificial intelligence, another company is seeing rapid growth. Memory chip maker Micron Technology on Wednesday provided third-quarter revenue guidance that beat analysts’ expectations and also reported unexpectedly strong quarterly profit.

As a result, the company’s shares soared more than 16% in extended trading, which adds up to more than 60% gains over the past 12 months. Micron shares are currently trading around $110, and if the price remains at this level following Thursday’s trading results, it will become an all-time high for the company.

What does the company’s report show?

Micron Technology’s strong report and forecast illustrate growing demand for high-quality memory chips and other advanced semiconductor solutions. This trend is driven by the desire of large technology companies to integrate generative artificial intelligence into their products.

Micron’s High Bandwidth Memory (HBM) chips, which play a key role in developing complex AI applications, are in high demand. According to the company’s CEO Sanjay Mehrotra, the 2024 supply is already sold out and most of the 2025 supply has already been allocated.

Micron has also secured support from AI chip leader Nvidia, which will use the latest HBM 3E chips in its next-generation H200 GPUs. Previously, the only supplier of HBM chips to Nvidia was the South Korean company SK Hynix.

Micron Chief Commercial Officer Sumit Sadana announced the acquisition of new customers for HBM products, whose names have not yet been disclosed. Wednesday’s adjusted earnings per share were Micron’s first after five straight quarters of losses, according to LSEG. Analysts predict that the company’s share of the high-margin HBM market will grow throughout the year.

Micron innovation

Micron specializes in the design and manufacture of two main types of chips: flash memory and dynamic random access memory (DRAM).

Micron flash memory targets the storage market and is used in a variety of devices such as solid state drives (SSDs), USB flash drives, memory cards and others. DRAM, on the other hand, is used in data centers, personal computers, smartphones, and other computing devices, where it provides the memory needed to run software.

“Micron’s impressive earnings and outlook suggest that GenAI’s momentum is driving an important era of growth for DRAM and, most importantly, for HBM vendors,”

– said Bob O’Donnell, principal analyst at Technasis Research.

Company expectations

Revenue from HBM is projected to have a positive impact on Micron’s third-quarter gross margin. The company is expected to generate several hundred million dollars in revenue from these advanced chips in fiscal 2024. This will represent a small but growing share of Micron’s overall sales.

Micron forecast third-quarter adjusted gross profit of 26.5%, plus or minus 1.5%. This is higher than market estimates of 20.8%.

According to LSEG, the company’s revenue for the current quarter is projected at $6.60 billion (plus or minus $200 million). This is significantly higher than analysts’ forecasts, which expected $6.03 billion.

Micron reported second-quarter revenue of $5.82 billion, above analysts’ estimates of $5.35 billion.