Micron Technology Stock Price: Micron surges 15% to record high as AI demand supports strong forecasts.
The stock has risen 15% in the past day, pushing the Philadelphia chip index 3% higher. Micron reporting earnings before its competitors helps gauge broad semiconductor demand.
The company said Wednesday that its high-bandwidth memory (HBM) chips, ultra-fast semiconductors used to develop AI applications, are sold out in 2024. It added that most of the 2025 supply has also been allocated.
“Memory is a major beneficiary of AI adoption and we expect the industry to see a V-shaped recovery,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. “Sales will reach 55% in 2024. %, and is expected to increase by 35% in 2025.” .
Micron, one of two suppliers of HBM chips to Nvidia along with Korea’s SK Hynix, was expected to see its market value increase by about $16 billion based on its stock price of $110.92.
On Wednesday, ahead of the results, Micron was trading at about 24 times forward 12-month earnings estimates, compared with 14.53 times for smaller rival Western Digital. Micron’s stock price has surged more than 60% in the past 12 months, boosted by investor confidence that the company will increase its share of the high-margin HBM market this year and next. Sumit Sadana, Micron’s chief business officer, told Reuters on Wednesday that the company has signed up new customers for HBM products that it has not yet announced.
This quarter’s forecast for adjusted gross margin of 26.5%, plus or minus 1.5%, also beat market estimates of 20.8%. That’s because relatively new HBM chips are in short supply, giving companies like Micron more pricing power.
“Tighter supply, rising demand and normalization of excess inventory combined with HBM’s increased scale are driving a dramatic improvement in prices,” said analysts at Piper Sandler. (Reporting by Medha Singh in Bengaluru; Editing by Pooja Desai and Shinjini Ganguli)
