Micron revenue nearly quadruples on AI memory demand, forecasts stronger quarter

Net income for the quarter jumped to $37.7 billion, up from just $3.2 billion a year earlier. Chairman and Chief Executive Sanjay Mehrotra said the results set new quarterly and full-year records for a company that has emerged as one of the biggest beneficiaries of the AI boom. He added that the company expects to do even better in the coming fiscal year.

'AI is becoming super intelligence, and memory enhances this intelligence and the competitiveness of our customer's platforms,' Mehrotra said. 'We are increasing our investments in technology, products and manufacturing to help drive SI forward with our customers and our strategic customer agreements provide added confidence in the durability of Micron's financial performance.'

For the first quarter, Micron forecast earnings of $38.15 per share on sales of $61.5 billion at the midpoint of its range. Wall Street is looking for $35.40 per share on revenue of $57 billion, according to SiliconANGLE.

Micron's stock barely moved in after-hours trading, a muted reaction that came after shares had gained more than 500% in the last 12 months. The company has been selling all the memory chips it can manufacture, often months before delivery, as AI demand creates a global supply crunch that has raised prices across consumer electronics, including Apple Inc.'s MacBooks and iPads and Microsoft Corp.'s Xbox consoles.

Zacks Investment Research analyst Andrew Rocco said Micron has the 'magical elixir' of pricing power and margins. 'Micron's gross margins of 87% demonstrate immense pricing power and dwarf any past cycle,' he said. 'Additionally, revenue visibility is crystal clear thanks to its hoard of locked-in long-term contracts. Meanwhile, AI spending is accelerating. With two frontier models going public in the coming months, new capital raised is likely to go straight to spending on products like Micron's.'

Rocco said the muted reaction should not come as a surprise. 'Micron's character as a stock is to make gains in the weeks following earnings, not necessarily the day after,' he said. 'In fact, although the stock has soared over the past year, its performance immediately following earnings has been mixed.'

Micron is the only company in the U.S. able to supply chip and server makers with high-bandwidth memory, or HBM, products that provide the dynamic random-access memory AI workloads need to retain context and function properly. It is building two new manufacturing facilities in the U.S. expected to cost more than $250 billion. The largest, in Clay, New York, broke ground in January, and a smaller facility in Boise, Idaho, is expected to come online next year.

During the quarter, DRAM revenue rose 343% to $39.8 billion, accounting for almost three-quarters of total sales. On a conference call with analysts, Mehrotra said in response to a question that the company has a 'strong roadmap for future HBM products' and is working with Nvidia Corp. on what will be the world's 'first custom HBM implementation.'

Micron's main competitors in memory are South Korea's SK hynix Inc. and Samsung Electronics Co. Ltd. Although those rivals command a larger share of the HBM segment, Micron's market capitalization has grown to more than $1.2 trillion. Mehrotra also said the company gave increased salaries and/or bonuses to every employee in the last fiscal year, averting a threatened strike by workers at a major factory in Taiwan. Employees there had demanded higher compensation after counterparts at SK hynix and Samsung negotiated bonuses of more than $500,000 in some cases.