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micron Shares soared in pre-market trading Thursday after the memory maker reported massive third-quarter earnings as demand for memory soars due to the AI boom.
The company’s revenue more than quadrupled in the third quarter to $41.46 billion from $9.3 billion a year earlier, according to a report Wednesday. According to LSEG’s consensus estimate, sales exceeded analysts’ expectations of nearly $36 billion.
The company expects sales of about $50 billion this quarter, up from $11.3 billion a year ago. The company’s stock price rose 16.4% in pre-market trading, marking an impressive 723% rise over the past year, giving the company a market capitalization of $1.2 trillion.
Micron stock over the past year.
Micron has benefited from large hyperscalers building AI infrastructure because AI data centers require large amounts of memory chips. This reduced the supply of memory available for smartphones, PCs and other devices, creating a supply imbalance that pushed up memory prices and boosted Micron’s results.
The company announced Wednesday that it has signed 16 long-term contracts with customers ranging from data centers to automakers, securing revenue for three to five years and expected to provide $22 billion in customer funding.
Analysts at RBC Capital Markets said in a note Wednesday that they expect about 40% of the company’s revenue to come from long-term contracts with embedded floor prices. This should help limit margin risk even if demand weakens over the life of the contract, which is typically five years, they added.
“Our base case is that the current upcycle continues until 2027, and the SCA gives us further confidence on sustainability. We raise our forecasts, raise our PT and reiterate our case for outperformance,” the analysts said.
Tech stocks rebound
Micron’s explosive profits helped lift global tech stocks, reversing the sector’s steep decline that hit the following companies: intel, Nvidiaand AMD at the beginning of the week.
In premarket trading Thursday, Qualcomm rose 12%, Intel rose nearly 6%, AMD rose 3.6% and Nvidia rose 1.5%.
“U.S. stocks have seen some recovery as Micron’s results provide renewed reassurance that the AI investment cycle remains firmly in place,” Daniela Hathorne, senior market analyst at Capital.com, said in a note Thursday.
Hathorn said strong memory demand from data center and AI infrastructure customers reinforces the view that capital investment in AI will continue to accelerate.
“This is boosting sentiment across the semiconductor sector following the recent weakness in high-growth stocks, and suggests investors remain willing to take stock of near-term volatility as long as earnings prospects continue to justify higher valuations,” Hathorn said.
