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Micron Technology (MU) said it is getting a lift from cloud service providers needing its advanced memory chips to support their artificial intelligence systems. MU stock jumped on Thursday after the company delivered better-than-expected quarterly results and guidance.
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“We are in the very early stages of a multiyear growth phase catalyzed and driven by generative AI,” Micron CEO Sanjay Mehrotra said on a conference call with analysts late Wednesday. “Memory is at the heart of GPU-enabled AI servers, and we are already seeing strong demand driven by early deployment of AI solutions, which will only accelerate over time.”
Graphics processing units, or GPUs, have grabbed most of the headlines from the AI infrastructure buildout, but memory also is a critical component, he said.
Mehrotra touted Micron’s advancements in DRAM and Nand memory chips at leading-edge process nodes. That includes 1-alpha and 1-beta DRAM chips and 176-layer and 232-layer Nand chips.
Micron also is leading the industry transition to DDR5, fifth-generation double data-rate dynamic random-access memory. Plus, Micron is rolling out HBM3E high-bandwidth memory products.
In addition to data centers, Micron expects to capitalize on the coming trend of AI PCs and smartphones.
MU Stock Rises After Quarterly Report
On the stock market today, MU stock advanced 8.6% to close at 85.48.
Late Wednesday, Micron reported results for its fiscal first quarter ended Nov. 30. The Boise, Idaho-based company said it lost an adjusted 95 cents a share on sales of $4.73 billion, topping analyst estimates. Micron’s revenue rose 16% year over year, marking its first sales gain after five quarters of decline. Executives said they are seeing an improved business climate after a cyclical downturn.
For the current quarter, Micron predicted an adjusted loss of 28 cents a share on sales of $5.3 billion. That’s based on the midpoint of its outlook. In the year-earlier period, Micron lost $1.91 a share on sales of $3.69 billion.
Start Of AI-Driven Up-Cycle
At least 17 Wall Street analysts raised their price targets on MU stock after the report.
Rosenblatt Securities analyst Hans Mosesmann upped his price target to 140 from 100. He rates MU stock as buy.
“Micron definitively has signaled the start of a massive AI-driven memory up-cycle with leading-edge nodes and HBM (high-bandwidth memory) already constrained or sold out for 2024,” Mosesmann said in a note to clients.
Micron forecast fiscal 2024 capital expenditures of $7.5 billion to $8 billion, slightly higher than last year’s levels and its prior plans. That news is positive for semiconductor equipment companies with greater exposure to the memory chip segment, including Lam Research (LRCX) and Applied Materials (AMAT).
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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