Micron Stock Jumps on Upbeat Memory Chip Forecast From SK Hynix

Micron shares have added more than $160 billion in market value over the past six months. (Courtesy Micron)

Key Points

• SK Hynix, a major memory chip producer, has sold out its chip production for the coming year due to a surge in artificial-intelligence demand.
• SK Hynix reports a record quarterly operating profit of approximately $8 billion, a 62% increase from the previous year.
• Micron Technology shares rise, extending a six-month surge of approximately 190%.

Micron Technology shares rose in premarket trading Wednesday after its larger rival in the memory chip space, South Korea’s SK Hynix , forecast a “supercycle” of demand powered by the boom in artificial-intelligence investments.

SK Hynix, a key Nvidia supplier, said it has sold out its entire chip production for the coming year, adding that capacity in its traditional DRAM memory chip division was likely to be limited as a result of the surge in AI demand.

“This structural constraint on DRAM supply is expected to support the current prolonged memory supercycle, as supply growth lags behind accelerating demand,” said SK Hynix’s head of DRAM marketing, Kim Kyu-hyun.

SK Hynix also posted record quarterly operating profit of around $8 billion, a 62% increase from last year, with revenue soaring nearly 40% to just over $33 billion.

Micron and SK Hynix are two of the few companies that make so-called high-bandwidth memory chips (HBM), which are a crucial component in AI technologies. Micron’s new HBM3e version of the chip is embedded into Nvidia’s highly sought after Blackwell GPUs.

Last month, Boise, Idaho-based Micron forecast fiscal first-quarter revenue in the region of $12.5 billion, with earnings of around $3.75 a share. It’s fiscal fourth quarter update included a 46% surge in revenue, which came in at $11.2 billion, and earnings of $3.03 a share.

Earlier this week, Citigroup analyst Christopher Danely lifted his price target on Micron stock by $25, taking it to $275 a share. The analyst also forecast the largest quarter-on-quarter increase in DRAM pricing since the 1990s, thanks in part to AI demand and capacity constraints, which he sees powering a 20% increase in Micron earnings.

Micron will report first-quarter earnings on Dec. 17.

Micron stock rose 2.8% in premarket trading Wednesday to $228.10, a move that would extend the stock’s impressive six-month surge to around 190%.

Micron shares were also getting support from a better-than-expected quarterly earnings update from Seagate Technology, which makes disk drives used in data storage and is seen as an indicator of memory demand.

Late Tuesday, Seagate posted fiscal first-quarter revenue of $2.63 billion, topping Street forecasts, and said current quarter revenue would rise to around $2.7 billion, citing “clear visibility into sustained demand strength.”

“AI is transforming how content is being consumed and
generated, increasing the value of data and storage and Seagate is well positioned for continued profitable growth,” said Seagate CEO David Mosley.

Write to Martin Baccardax at martin.baccardax@barrons.com