Micron has temporarily allayed concerns about a slowing AI market. The U.S. memory chip manufacturer presented a revenue forecast that far exceeds Wall Street’s expectations and anticipates that demand for AI memory will continue to outpace supply in the coming years. Investors rewarded the company with a stock price jump of about 14 percent in after-hours trading.
For the fourth fiscal quarter, which ends in late August, Micron expects revenue of approximately $50 billion. According to Bloomberg, analysts had previously forecast an average of $43.2 billion. Adjusted earnings per share are expected to come in at around $31, compared to a market expectation of $25.31.
Third-quarter results also exceeded expectations. Revenue came in at $41.5 billion, while adjusted earnings per share rose to $25.11. In addition, the adjusted gross margin rose to 84.9 percent, significantly higher than the 81.9 percent analysts had anticipated.
Multi-Year Agreements Aimed at Stabilizing the Market
Notably, Micron has now signed sixteen strategic customer agreements, with an average term of three years. With these agreements, the company is attempting to limit the sharp price fluctuations that traditionally characterize the memory market.
According to Bloomberg Intelligence analyst Jake Silverman, these agreements will support current price levels at least through 2027. As production capacity becomes better able to keep pace with demand around 2029, he believes the contracts will also contribute to more stable prices.
The strong outlook is primarily based on continued investments in AI infrastructure. Micron, like Samsung and SK Hynix, is benefiting from the explosive demand for high-bandwidth memory (HBM), the specialized memory used in conjunction with AI processors.
CEO Sanjay Mehrotra does not expect the market to reach equilibrium anytime soon. During the earnings call, he said he saw no signs that supply would be able to keep up with demand before the end of 2027. He does not expect a gradual improvement in the availability of memory chips until sometime in 2028.
According to Micron, this means that current price levels could persist for the time being, despite the expansion of production capacity.
Nvidia Chooses Micron Again
Micron is one of Nvidia’s suppliers of HBM memory. Earlier this month, Nvidia CEO Jensen Huang confirmed that the next generation of Vera Rubin AI platforms will use Micron’s HBM4 memory, alongside that of other suppliers. The three largest memory manufacturers are currently competing for the largest possible share of this rapidly growing market.
The quarterly results also came at a crucial moment. In recent days, semiconductor stocks had been under pressure as investors feared that the billions in investments in AI data centers had peaked. With its outlook, Micron sent the exact opposite signal, causing futures on U.S. technology stocks to rally immediately.
SK Hynix Seeks Billions for Further Growth
That confidence is also evident among competitor SK Hynix. The South Korean manufacturer, currently the market leader in HBM memory, announced this week that it is seeking a U.S. stock market listing. Through the offering, the company aims to raise approximately $29 billion to further capitalize on the persistently strong demand for AI memory.
This combination of a record forecast, long-term customer contracts, and a market that, according to Micron, will continue to face shortages for years to come, gives investors new reason to remain confident in the AI infrastructure market for the time being, Bloomberg reports.