Micron Earnings Are Best in Chip History After Nvidia. The AI Trade Is Back.

Micron Technology has also become a key supplier of high-bandwidth memory, or HBM, for artificial-intelligence servers. (David Paul Morris/Bloomberg)

Key Points

• Micron Technology reported earnings per share of $4.78 and revenue of $13.6 billion, exceeding Wall Street estimates.
• Micron forecast current-quarter revenue with a midpoint of $18.7 billion, significantly above analysts’ expectations of $14.3 billion.
• Micron management stated that the HBM memory market will grow to $100 billion by 2028 and supply will be substantially short of demand.

The AI trade may be back on track.

Micron Technology stock surged Thursday, the day after the memory chip maker reported better-than-expected earnings results and gave guidance that was significantly higher than expectations.

For the November quarter, the chip company reported earnings per share of $4.78, compared with Wall Street’s consensus estimate of $3.96, according to FactSet. Revenue came in at $13.6 billion, which was above analysts’ expectations of $12.9 billion. For the current quarter, Micron forecast a revenue range with a midpoint of $18.7 billion, above analysts’ expectations of $14.3 billion.

“Outside of NVIDIA this was likely the best revenue/$ net income upside in the history of the U.S. semis industry,” Morgan Stanley analyst Joseph Moore wrote in a note to clients Thursday.

Moore is referring to the Nvidia earnings report from May 2023, which sparked the start of the artificial-intelligence trade. At the time, Nvidia provided a quarterly revenue outlook of $11 billion versus the $7.2 billion consensus.

In early trading Thursday, Micron shares surged 13%. Other AI-related chip stocks also rose, with Nvidia up 1.7%, Advanced Micro Devices gaining 3.5%, and Broadcom edging 0.8% higher.

Micron is a leader in the markets for dynamic random-access memory, or DRAM, used in desktop computers and servers, and for flash memory, found in smartphones and solid-state hard drives. It has also become a key supplier of high-bandwidth memory, or HBM, for artificial-intelligence servers.

In recent months, investor fears about the sustainability of the artificial-intelligence buildout have mounted. Some have increasingly questioned the size of infrastructure investments by large technology companies and AI start-ups, worried about potential overcapacity.

Semiconductor investors likely found solace in Micron management’s positive remarks, which suggested there is overwhelming demand for its memory chips as customers are looking for multi-year contracts for their data centers.

“We anticipate our business performance to continue strengthening through fiscal 2026,” Micron CEO Sanjay Mehrotra said in the earnings release.

On the call with analysts, Micron management said the market for HBM memory will grow to $100 billion in 2028 from $35 billion this year. The company said HBM is sold out for 2026, adding the supply of memory chips will be “substantially short” of demand for the “foreseeable future.”

Management also said demand is driven by large well-capitalized technology companies that are implementing multi-year data-center infrastructure buildout plans.

“There has been a very significant and pervasive step-up in demand across the data-center customer base,” Sumit Sadana, Micron’s chief business officer, said on the earnings call.

Micron’s earnings, guidance, and commentary is evidence the AI buildout is accelerating. At least according to a major chip supplier, there is no sign of weakness yet.

Write to Tae Kim at tae.kim@barrons.com