Micron Rallies as Earnings and Outlook Crush Wall Street Estimates
Micron Technology exceeded Wall Street expectations in its fiscal third quarter and delivered a much stronger forecast for the current period.
The memory-chip manufacturer’s shares jumped more than 13% in after-hours trading as investors welcomed continued demand from artificial intelligence and data-centre customers.
Micron Issues Strong Fourth-Quarter Guidance
Micron expects fiscal fourth-quarter revenue of between $49 billion and $51 billion. That forecast was significantly higher than the Wall Street consensus estimate of $43.24 billion.
The company also projected adjusted earnings of between $30.00 and $32.00 per share, compared with analysts’ expectations of $25.31.
The upbeat guidance strengthened confidence that AI-related demand will continue supporting memory-chip prices and Micron’s earnings growth.
AI Demand Keeps Memory Supply Tight
Micron has benefited from restricted supply across a market dominated by a limited number of major manufacturers.
At the same time, rapidly growing data-centre demand has pushed up prices for memory components. These products are also widely used in consumer electronics, including smartphones and laptops.
Micron’s technology is an important component in processors developed by Nvidia and Alphabet, as well as the servers that operate those chips.
Supply Constraints Could Continue Beyond 2027
During Micron’s post-earnings conference call, management said the memory market was likely to remain tight for several years.
Chief Executive Sanjay Mehrotra said AI demand across multiple segments, combined with structural supply limitations, could keep market conditions constrained beyond calendar year 2027.
Deepwater Asset Management’s Gene Munster described the comments as a major positive for the AI investment theme. He suggested that demand could continue exceeding supply into late 2028 or even 2029.
Micron Stock Benefits From AI Expansion
Strong demand for Micron’s AI-related manufacturing capacity has helped its stock rise more than 700% over the past year.
The rally has also pushed the company’s market capitalisation above the $1 trillion threshold.
Investors have increasingly viewed Micron as one of the leading beneficiaries of the artificial intelligence infrastructure boom.
HBM Pricing Strengthens Micron’s Margins
Jake Behan, head of capital markets at Direxion, said the main concern surrounding AI demand was not its current strength but its long-term durability.
Micron’s latest report reduced some of those concerns by providing greater visibility through strategic customer agreements and the expansion of its high-bandwidth memory business.
Behan said AI demand was already translating into higher revenue. However, he noted that strong pricing power in high-bandwidth memory was the main factor improving margins and lifting Micron’s earnings outlook.
Quarterly Revenue Reaches Record High
For the quarter ending May 28, Micron reported adjusted earnings of $25.11 per share. This comfortably exceeded analysts’ forecast of $20.49.
Quarterly revenue climbed to a record $41.46 billion, well above the consensus estimate of $35.69 billion.
The result also represented a sharp increase from the $9.30 billion in revenue recorded during the same period a year earlier.
Micron Expands Investment in AI Memory
Mehrotra said the record third-quarter results and stronger fourth-quarter outlook demonstrated the strategic importance of memory technology in the AI era.
Micron is investing at record levels in technology, new products and additional supply capacity to meet rapidly increasing customer demand.
The company also expects its multi-year strategic customer agreements to make its financial performance more durable and predictable.
HBM4 and Advanced Memory Products Gain Momentum
Micron highlighted continued progress across its AI-focused product portfolio.
The company reported high-volume shipments of HBM4 memory for a leading customer platform. It also confirmed further development of its next-generation HBM4E products.
Micron is additionally expanding production of advanced solid-state drives and LPDDR5X memory solutions.
These products are designed to support AI servers, data centres, mobile devices and other high-performance computing applications.
Micron Generates Strong Free Cash Flow
Micron invested $7.1 billion in capital expenditure during the quarter as it expanded production capacity and advanced its product development programmes.
The company generated adjusted free cash flow of $18.3 billion.
Micron’s board also declared a quarterly dividend of $0.15 per share, payable on July 21.
Analysts Say Chip Rally Remains Intact
Wedbush analysts said Micron’s strong earnings should improve sentiment among technology investors following recent volatility across semiconductor stocks.
According to the firm, the results indicate that the memory-chip investment cycle remains firmly intact.
Wedbush also argued that the broader memory and semiconductor rally may still be in the early stages as AI infrastructure spending continues to expand.
