Micron Technology, a leading computer memory and storage manufacturer, experienced a 3% decline in its shares during after-hours trading on Wednesday. Despite delivering better-than-expected results for the fiscal third quarter ended May 30, investors seemed more concerned about the company’s revenue forecast, which aligned with estimates.
In terms of earnings per share, Micron reported 62 cents adjusted, surpassing the LSEG consensus estimate of 51 cents. The company’s revenue also exceeded expectations, reaching $6.81 billion compared to the projected $6.67 billion.
Looking ahead, Micron anticipates adjusted earnings per share of $1.08 on revenue of $7.6 billion for the current quarter. Analysts had predicted earnings per share of $1.05 on revenue of $7.6 billion. Despite the positive outlook, investors remained focused on the revenue forecast rather than the better-than-expected results.
Micron’s shares have more than doubled over the past year, largely driven by the company’s involvement in the artificial intelligence (AI) sector. As the demand for AI technology, such as OpenAI’s ChatGPT, continues to rise, Micron’s advanced memory, crucial for AI graphics processing units (GPUs) like Nvidia’s, positions the company to benefit significantly.
In the year-ago quarter, Micron reported a net loss of $1.9 billion, or $1.73 per share. However, the company has now achieved $332 million in net income, or 30 cents per share. Micron’s CEO, Sanjay Mehrotra, emphasized the growth of the company’s AI business while acknowledging the sluggishness in the smartphone and PC markets.
Mehrotra stated that Micron’s AI-oriented products were likely to experience price increases, and the company’s data center business witnessed a 50% growth on a quarter-to-quarter basis. He also mentioned that the robust demand for data center products driven by AI was causing supply constraints on their leading-edge nodes. Consequently, Micron expects continued price increases throughout calendar 2024, despite steady near-term demand in PCs and smartphones.
During a call with analysts, Micron revealed that its high bandwidth memory, essential for AI chips, is already sold out until 2025. Mehrotra expressed confidence in Micron’s position as one of the major beneficiaries in the semiconductor industry’s multiyear growth opportunity driven by AI.