• TWEAK
• Hardware
• Ram

Micron on course for AI demand record

Translate from : Micron på vej mod rekord efter AI efterspørgsel

Memory chip maker Micron Technology rose 18% on Thursday and was poised to open at a record high after a strong revenue forecast raised hopes that surging demand for AI hardware would drive growth at the Nvidia supplier. Other chip companies such as Western Digital WDC.O, Advanced Micro Devices AMD.O and Broadcom AVGO.O also rose between 1.9% and 7.1% before the open as Micron, which reports earnings before its rivals, helps rate it wider demand for semiconductors.

The company said on Wednesday that its high-bandwidth memory (HBM) chips, which refer to ultra-fast semiconductors used in the development of AI applications, were sold out for 2024. A majority of its supply for 2025 has also been allocated, it added.

"Memory is a key driver of AI adoption, and we expect a V-shaped recovery in the industry, with revenue expected to grow 55% in 2024 and 35% in 2025," said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.

Micron, one of the two suppliers of HBM chips to Nvidia NVDA.O along with South Korea's SK Hynix 000660.KS, was poised to add nearly $19 billion to its market value, based on its pre-trade price of $113.40. On Wednesday before the results, Micron was trading at about 24 times its 12-month forward earnings forecasts, compared with 14.53 for smaller rival Western Digital.

Micron's shares have risen more than 60% over the past 12 months, buoyed by investor confidence that the company will increase its share of the high-margin HBM market this year and next. Micron's Chief Business Officer, Sumit Sadana, told Reuters on Wednesday that the company has signed deals with new customers for its HBM products, which it has yet to announce. Its forecast for the current quarter for adjusted gross profit margin of 26.5%, plus or minus 1.5%, was also above market estimates of 20.8%, as the relatively new HBM chips are in short supply, giving companies such as Micron more power over pricing.

"Constrained supply, increasing demand, normalization of excess inventory, combined with an increased size of HBM, are driving dramatic improvements in pricing," Piper Sandler analysts said.