Micron profit surges on AI memory shortage as shares jump

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Micron profit surges on AI

Highlights

Micron reports net income up nearly 1,400 per cent year-on-year to $28.2bn, with $41.5bn revenue and 84.9 per cent gross margin for Q3.
Micron forecasts current quarter revenue of $50bn and 86 per cent gross margin, both exceeding analyst expectations, sending shares up 14 per cent after hours.
AI-driven memory chip shortages benefit Micron as big tech firms plan $725bn AI infrastructure spend in 2024, while U.S. government grants it over $6bn for new facilities.

Quarterly results and demand outlook

As reported by Financial Times, Micron says net income rises nearly 1,400 per cent in the third quarter from a year earlier, as the U.S. memory chipmaker posts revenue of $41.5bn for the quarter to the end of May and gross margin of 84.9 per cent, up from 39 per cent a year ago.

The company says profit reaches $28.2bn, ahead of Visible Alpha estimates of $24.3bn. It also expects revenue of $50bn for the current quarter, well above the $43.7bn Wall Street expected, while projecting gross margin to increase further to 86 per cent, about one percentage point above analyst forecasts.

Micron shares surge about 14 per cent in after-hours trading following the announcement. Investors are watching the results closely after chip stocks come under pressure this week, with Micron shares having fallen more than 13 per cent on Tuesday as concerns over possible U.S. Federal Reserve interest rate increases weigh on high-valuation equities.

Memory shortage reshapes chip industry

Prices for memory chips have surged this year as supply becomes a bottleneck in building AI data centres. Advanced processors from Nvidia and AMD require high-bandwidth memory from a small group of suppliers, including Micron, to support the workloads needed to train and run leading AI models.

Micron, together with Korea's SK Hynix and Samsung, dominates the global memory chip market and is emerging as a major beneficiary of the AI infrastructure boom. Amazon, Meta, Microsoft and Alphabet are set to spend a combined $725bn on AI infrastructure this year, underscoring the scale of demand feeding through the supply chain.

The shortage is also affecting more traditional consumer chips as manufacturers prioritise new production lines for advanced high-bandwidth memory used in data centres. Last week, Apple chief executive Tim Cook warns that the generational shortage will force the company to raise product prices.

Micron has been allocated more than $6bn in direct U.S. government manufacturing grants under the 2022 Chips Act to support investment in new facilities. Last month, it hosts commerce secretary Howard Lutnick and other senior U.S. officials at an event in Virginia as it starts building some of its most advanced memory chips at its Manassas facility.

In our earlier coverage of Micron’s AI-driven surge in memory demand, we detailed how the company’s fiscal Q3 revenue jumped to $41.46bn and how its guidance for about $50bn in the current quarter signaled that tight supply conditions could persist beyond 2027. We also highlighted that data center demand led the gains, helping lift Micron’s market position as pricing strengthened across both server and consumer memory.

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