(Bloomberg) – Micron Technology Inc., Wall Street's favorite chip maker of the year, has given away a bright forecast for the quarter, supported by demand for artificial intelligence devices.
The company posted its third quarter results and fourth quarter forecasts that exceeded estimates, but the stock made profits after a conference call with executives.
The key focus was high-bandwidth memory, a component used in artificial intelligence computing. The technology is increasing sales at Micron, but the company didn't predict the type of runaway growth that some investors were looking for.
In a memo, Wedbush Securities analyst Matt Bryson said sales were “impressive, but our previous expectations are still pretty much parallel.”
After initially winning 7.7% after Micron's earnings report was released on Wednesday, the stock tested temporarily negative. Pre-market trading rose 2% on Thursday.
High-bandwidth memory, or HBM, has become a star of micron's business. It is used in machines that develop and run AI tools. The company expects continued growth from its market as such software becomes more complex and requires more memory. The company has also begun to recover from a narrower profit margin than last quarter.
During the conference call, the analysts asked CEO Sanjay Mehrotra about HBM and tried to understand how much he's growing.
The company said its fourth quarter revenue would be around $10.7 billion. That was far above the average analyst estimate of $9.89 billion. The profit is around $2.50 per share, excluding certain items, compared to the $2.03 forecast.
Sales rose 37% to $9.3 billion in the third quarter, which ended May 29th. Analysts estimated $8.85 billion. Revenue was $1.91 per share, excluding some items, compared to the average forecast of $1.60.
In addition to pursuing more AI revenue, Idaho's Boise-based Micron said in a previous memo, according to Dan Morgan, senior portfolio manager at Synovus.
The growth outlook turned Micron into the hottest stock in the chip industry this year, with stocks rising 51% until the end of Thursday.
– Support from Ian King.
(Update in pre-market stocks and additional context)
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