By Harshita Mary Varghese and Max A. Charney
(Reuters) – Micron Technology Inc on Wednesday reported better-than-expected third-quarter sales on strong demand for memory chips, but its outlook for the current quarter disappointed investors who had been optimistic about the company's performance amid an artificial intelligence boom.
The Idaho-based company's shares fell 7.2% in after-hours trading after fourth-quarter sales were roughly in line with expectations. The stock had risen 13% this month ahead of the earnings release on investor optimism that demand for AI would benefit Micron.
“Micron's forecasts were broadly in line with expectations, which may have been good enough a few months ago, but they're not enough to meet today's lofty expectations, especially after the company's stock has risen 67% this year,” said Michael Shulman, chief investment officer at Running Point Capital.
Creative Strategies analyst Ben Bajarin said the price movement in after-hours trading was mainly due to the weaker-than-expected outlook.
The company now expects sales of $7.6 billion for the quarter, plus or minus $200 million, beating expectations of $7.6 billion, according to LSEG data.
Micron is one of the few companies that provides the high-bandwidth memory chips used in cutting-edge AI systems and is well positioned to benefit from surging demand for semiconductors.
Because Micron acts as a barometer for demand for different types of chips and end markets, the company's performance typically determines the direction of the chip division's revenue.
“We're very optimistic because, after Nvidia, Micron has probably more exposure to the growth of AI than any other semiconductor company,” Micron's Chief Operating Officer Sumit Sadhana said in an interview.
The company said it was “sold out” of its HBM chips for 2024 and 2025. The chips are used in AI processors designed by Wall Street darling Nvidia.
Micron reported third-quarter sales of $6.81 billion, beating expectations of $6.67 billion, according to LSEG data.
After Micron's earnings report, Nvidia shares fell 1.4%, Advanced Micro Devices fell 0.7% and Intel fell 0.4%.
(Reporting by Harshita Mary Varghese in Bengaluru and Max A. Charney in San Francisco; Editing by Pooja Desai and David Gregorio)
