Micron Shares Surge on Strong Profit Outlook and AI Chip Demand
Micron Technology’s shares jumped 9% in premarket trading on Thursday after the U.S. chipmaker issued a bullish quarterly profit forecast, highlighting its growing dominance in the high-bandwidth memory (HBM) chip market as prices soar.
Market Leadership Amid Rising Demand
Micron is among only three key suppliers of HBM chips, alongside South Korea’s Samsung and SK Hynix. These advanced chips play a vital role in training and deploying generative artificial intelligence (AI) models, driving unprecedented demand from data centres worldwide.
The company projected a second-quarter adjusted profit nearly twice what Wall Street anticipated, demonstrating its ability to capitalise on a global memory chip shortage. The supply crunch, fuelled by surging AI adoption, has already lifted Micron’s share price by about 168% this year.
Tight Supply Expected to Persist
During a conference call with investors, Chief Executive Officer Sanjay Mehrotra said the tight supply environment is likely to persist beyond 2026. He added that Micron expects to fulfil only half to two-thirds of the demand from some of its major customers in the medium term. However, the company did not specify which clients might face shortfalls.
Analysts at J.P. Morgan noted that Micron faces a delicate challenge: balancing wafer capacity between high-value chips and lower-margin products for strategic customers. The firm observed that supply tightness has reached “unprecedented levels,” further enhancing Micron’s pricing power.
Strategic Refocus and Investment Expansion
Micron has been retooling its production facilities to cater to accelerating AI data centre demand. Earlier this month, it announced plans to dissolve its direct-to-consumer Crucial memory chip business, sharpening its focus on enterprise and AI applications.
In addition, Micron raised its capital expenditure target for 2026 to $20 billion as it accelerates investment in high-value memory production. J.P. Morgan expects new capacity to be swiftly absorbed by customers amid sustained AI-driven growth.
Micron currently trades at a 12-month forward price-to-earnings ratio of 10.81, compared with SK Hynix’s 7.21 and Samsung’s 9.62. Shares of rival chipmakers AMD and Nvidia also gained nearly 1% each in premarket trading.
with inputs from Reuters