Micron (MU) -) shares moved firmly higher in early Thursday trading after the chipmaker posted a narrower-than-expected fiscal-first-quarter loss and issued a solid near-term sales forecast linked to AI-related demand.
Micron posted an adjusted loss of 95 cents a share for the three months ended in November, after late last month updating markets that it would test the Wall Street consensus of a 97-cent loss.
Group revenue rose 15.5% from the year-earlier period to $4.73 billion, which topped Wall Street's consensus forecast of $4.64 billion.
Micron said it expected to post a non-GAAP loss for the three months ending in February, the group's fiscal second quarter, of around 28 cents a share, well inside the LSEG consensus estimate of around 62 cents.
Group revenue, Micron estimated, will approach $5.3 billion, also a tally firmer than the $5 billion Wall Street consensus, thanks to what is sees as improving demand linked to the surge in AI-related technologies.
Micron's developing deal with Nvidia
Micron's developing deal with Nvidia (NVDA) -), which would see its high bandwidth memory, or HBM, chips embedded in Nvidia's AI computing chips, is likely to drive revenue growth further into 2024, the company said.
"We are in the very early stages of a multiyear growth phase catalyzed and driven by generative AI, and this disruptive technology will eventually transform every aspect of business and society," Micron CEO Sanjay Mehrotra told investors on a conference call 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," he added.
"Micron is well positioned to leverage this growth, having executed the most robust set of new technology and product introductions in our 45-year history."
Micron shares were marked 7.77% higher in premarket trading to change hands at $84.52 each, a move that would extend the stock's six-month gain to around 28.5%.
"Micron sees the pricing recovery across DRAM and NAND to continue throughout 2024, with a healthy demand-supply dynamic and inventory destocking for the data center to normalize in the first half," said KeyBanc Capital Markets analyst John Vinh. He carries an overweight rating and increased $100 price target on Micron stock.
"PC and mobile units are expected to return to [year-over-year] growth, with content expansion benefiting from AI requirements," he added.
"Micron is progressing well in qualification with NVDA's GH200 and H200 and expects volume ramp to begin early 2024, reiterating the several hundred million dollar contribution."
- Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
