Micron Technology (MU) has projected a significant increase in its second-quarter adjusted profit, nearly double the expectations of Wall Street analysts, as soaring prices for memory chips are driven by tight supplies and robust demand from artificial intelligence (AI) data centers. The company, based in Boise, Idaho, expects an adjusted profit of $8.42 per share, plus or minus 20 cents, compared to the analyst estimates of $4.78 per share, according to LSEG data.
Following the announcement, shares of Micron surged nearly 11% on Thursday, indicating strong investor confidence in the company’s outlook. The demand for Micron’s chips, which are crucial components in a wide range of devices from data center servers and personal computers to smartphones and vehicles, continues to skyrocket, particularly in the AI sector. Micron is one of only three major suppliers of high-bandwidth memory (HBM) chips, essential for training and deploying generative AI models, alongside South Korea’s SK Hynix (000660.KS, HXSCL) and Samsung Electronics (005930.KS).
In a conference call with investors, Micron CEO Sanjay Mehrotra expressed his expectation that memory markets will remain tight beyond 2026. He noted that in the medium term, the company anticipates meeting only half to two-thirds of the demand from several critical customers. “It is inevitable in this environment that lots of customers across all segments will see an impact on their ability to procure the amount of memory they want to procure,” said Sumit Sadana, Micron’s chief business officer. “I don’t know of any customer that is getting 100% of what they want from us – and there are many, many that are getting substantially less than what they feel they need.”
Micron’s executives highlighted that the company is currently negotiating multiyear contracts with major customers and plans to elevate its capital expenditure for 2026 to $20 billion, up from a previous estimate of $18 billion. This strategic move underlines the company’s commitment to meeting the increasing demand driven largely by AI applications. According to Summit Insights analyst Kinngai Chan, “AI-related demand remains the biggest driver for Micron. It not only drives better margin for the company, but also helps non-AI product margins as it prioritizes its supply towards AI-related demand.”
The surge in demand from data centers is fueled by increased expenditures from large-scale cloud service providers, which offer hardware and cloud capacity as services. To meet this growing demand, Micron has been adjusting its production facilities accordingly. Earlier this month, the company announced it would cease its consumer-direct sales of memory chips under the “Crucial” brand name, further focusing its resources on the AI sector.
Analyst Jacob Bourne from eMarketer stated, “Micron has strategically repositioned its production capacity for the AI sector. As AI demand continues to soar and along with it key components, Micron will be among the winners that can supply those components, which include memory chips.”
For the current quarter, Micron projects revenue to be approximately $18.70 billion, plus or minus $400 million, significantly higher than analysts’ average estimate of $14.20 billion, as reported by LSEG data. In contrast, for the recently concluded fiscal first quarter, Micron reported sales of $13.64 billion and adjusted profit of $4.78 per share, surpassing analyst estimates of $12.85 billion and $3.95 per share.
As Micron continues to adapt to the evolving landscape of memory demand, it remains well-positioned to capitalize on the explosive growth of AI technologies. The company’s focus on high-bandwidth memory chips is expected to play a critical role in shaping the future of AI development and deployment.
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