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Micron Technology forecast first-quarter revenue above Wall Street estimates on Wednesday, betting on strong demand for its high bandwidth memory (HBM) chips used by the AI industry, sending the company’s shares up 10% after the bell.
The company is one of the only three providers of HBM chips along with South Korea’s SK Hynix and Samsung, which has allowed the U.S. firm to cash in on demand for semiconductors that help power generative AI technology.
The AI boom has also helped Micron cushion the hit from a memory chip inventory glut in PC and smartphone markets.
The company forecast revenue of $8.70 billion, plus or minus $200 million, for the first quarter, compared with estimates of $8.28 billion, according to LSEG data.
Micron’s results typically set the tone for the chip sector as it reports ahead of peers and serves a broad client base spanning the PC, data center and smartphone industries.
The company said in June its HBM chips were sold out for the 2024 and 2025 calendar years. The chips are used in the AI processors designed by Wall Street darling Nvidia.
Micron expects adjusted gross margin for the first quarter to be 39.5%, plus or minus 1%. Analysts had expected an adjusted gross margin of 37.7%.
For the fourth quarter, the company’s revenue jumped 93% to $7.75 billion.
