Micron stock jumps 19% after blockbuster earnings, leading chip rally
Micron Shares rose Thursday after the memory maker reported blockbuster earnings for the third quarter as the artificial intelligence boom led to increased demand for memory.
Shares rose 19%, pushing Micron’s market value to nearly $1.4 trillion. Meta And Tesla’s It is among the most valuable companies in the USA.
The company’s revenue more than quadrupled in the fiscal third quarter, from $9.3 billion a year earlier to $41.46 billion, according to a statement Wednesday. Revenue beat analysts’ expectations of about $36 billion, according to LSEG consensus estimates.
The company is currently forecasting approximately $50 billion in revenue for the quarter, up $11.3 billion from the prior year.
Micron split its shares last year.
Because AI data centers require large amounts of memory chips, Micron benefited from large hyperscalers building AI infrastructure. This reduced the supply of memory available for smartphones, PCs and other devices, creating a supply imbalance that drove memory prices higher and boosted Micron’s results.
The company said Wednesday that it has signed 16 long-term deals with customers ranging from data centers to automakers, locking in sales for a period of three to five years, and expects to see $22 billion in financial commitments from them.
The company expects about 40% of its revenue to come from long-term contracts at minimum prices, RBC Capital Markets analysts said in a note Wednesday. This will help limit margin risk even if demand weakens over the contract period, which is typically five years, they added.
“Our base case is for the current uptrend to continue through 2027, and the SCAs provide us with additional confidence in sustainability. We are upgrading forecasts, upgrading PT, and reiterating Outperform,” the analysts said.
Technology stocks are recovering
Micron’s big gains helped boost chip stocks and reversed steep selloffs in the industry, including at companies such as: Intel, NvidiaAnd Advanced Micro Devices at the beginning of the week.
Qualcomm Intel rose nearly 9% on Thursday and Applied Materials rose 6%. AMD increased to 5%.
“U.S. stocks rebounded somewhat as Micron’s earnings provided fresh assurance that the AI investment cycle remains robust,” Capital.com Senior Market Analyst Daniela Hathorn wrote in a note Thursday. he said.
Strong memory demand from data centers and AI infrastructure customers reinforces the narrative that capital spending on AI is ever-increasing, Hathorn said.
“This has helped lift sentiment across the semiconductor sector following recent weakness in high-growth names, suggesting investors are willing to look at short-term volatility as long as the earnings outlook continues to justify higher valuations,” Hathorn said.
