Micron shares rise on bets of strong demand for AI-related memory chips
Item 1 of 2 Sanjay Mehrotra, CEO of Micron Technology Inc., holds a chip on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 26, 2024. REUTERS/Brendan McDermid/File Photo
[1/2]Sanjay Mehrotra, CEO of Micron Technology Inc., holds a chip on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 26, 2024. REUTERS/Brendan McDermid/File Photo Purchase Licensing Rights, opens new tab
June 26 (Reuters) - Micron Technology
(MU.O), opens new tabshares rose 2% in premarket trading on Thursday, after a robust forecast from the chipmaker for fourth-quarter revenue on booming demand for its memory chips that power AI data centers.
The company saw a nearly 50% jump in sales of high-bandwidth memory (HBM) chips for the third quarter compared to the previous three months. Micron is one of the providers of HBM chips besides South Korea's SK Hynix
(000660.KS), opens new taband Samsung
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"AI servers are giving Micron an over-caffeinated growth spurt... (and) Micron is the only kid on the block shipping HBM3E at scale," said Michael Ashley Schulman, partner at Running Point Capital Advisors.
Micron said it will continue to invest in HBM chips which reflects the growing demand from AI chip front runners - Nvidia
(NVDA.O), opens new taband Advanced Micro Devices
(AMD.O), opens new tab, who are customers of the company.
J.P.Morgan said it expects Micron's HBM chip sales to accelerate, hitting a $8 billion annualized revenue run rate over the next one to two quarters.
Micron's Chief Business Officer Sumit Sadana told Reuters the extent of tariff-related pull-ins from customers in the third quarter was fairly modest.
"Tariffs (are) a factor, and management's acknowledgment of that is a positive, in our view. But don't see it as a big driver of recent strength," Morgan Stanley analysts said in a note.
Following the results, at least 10 brokerages raised their price targets on the stock.
Shares of peers AMD, Nvidia and Marvell Technology
(MRVL.O), opens new tabrose between 1-3% in premarket trading.
Micron is up 51.2%, while AMD and Nvidia have gained about 19% and 15%, respectively, so far this year.
Micron has a 12-month forward price-to-earnings ratio of 11.85, compared to SK Hynix's 6.48 and Samsung's 11.57.
Reporting by Akriti Shah in Bengaluru; Editing by Shailesh Kuber
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