Benefiting from surging demand for artificial intelligence devices, Micron Technology (MU.US), the largest computer memory chip manufacturer in the United States, has issued an optimistic outlook for the current quarter. In its fourth-quarter earnings report released Tuesday, Micron stated that first-quarter fiscal 2026 revenue is expected to reach approximately $12.5 billion, surpassing analysts' average expectation of $11.9 billion. Excluding certain special items, earnings per share are projected at around $3.75, exceeding analysts' previous forecast of $3.05. This outlook confirms that Micron has become a major beneficiary of artificial intelligence spending. Its High Bandwidth Memory (HBM) is crucial for the chips and systems needed to develop AI models, making this technology an extremely profitable product for the Boise, Idaho-based company.
Micron Technology released its fourth-quarter report after market close on September 23 Eastern Time. The data showed that Micron's Q4 sales increased 46% to $11.3 billion, compared to analysts' prior expectation of approximately $11.2 billion. Excluding certain special items, earnings per share reached $3.03, while analysts' average forecast was $2.84. Nevertheless, after this year's remarkable stock surge, it's not easy for Micron to continue surprising investors. Following the earnings release, its stock price fluctuated significantly in after-hours trading. Micron's stock price has nearly doubled this year, outpacing most peers and reflecting market optimism about AI prospects.
Micron CEO Sanjay Mehrotra stated in the announcement: "In fiscal 2025, our data center business reached record highs. Entering fiscal 2026, we have strong momentum with our most competitive product portfolio to date. As the only U.S.-based memory manufacturer, Micron has unique advantages in capitalizing on future AI development opportunities."
Micron indicated that the supply shortage of memory chips is expected to continue into next year. The sustained growth in demand for data center equipment makes it difficult for related companies to meet order requirements. AI-related business has also driven demand for storage chips such as NAND flash memory, Micron's second-largest product line.
Micron warned investors that spending will increase in response to market demand. In fiscal 2025, Micron invested $13.8 billion in new facilities and equipment, and expects this fiscal year's investment to exceed that figure. Micron disclosed that it has reached pricing agreements for most of its HBM3e memory chips for 2026 and has already begun providing samples of next-generation HBM4 chips. Micron expects to sell these products through fixed contracts, which will help ensure stable revenue.
Manish Bhatia, Micron's Global Operations Chief, stated in a post-earnings interview that the company remains focused on improving profits and prioritizes this over market share growth. He also noted that demand for memory chips from the PC and smartphone industries is rising. Bhatia pointed out that these sectors had previously lagged behind data center operators in adopting AI technology, but this situation is now changing.
Bhatia noted that HBM manufacturing is more complex and occupies factory equipment for longer periods compared to other types of chips. This limits overall HBM supply expansion, thereby maintaining healthy market development.
The memory chip market has long been known for boom-and-bust cyclical fluctuations and significant product price volatility. Micron and South Korean competitor SK Hynix Inc. have also made progress in competing with market leader Samsung Electronics Co. Both companies have more quickly launched the latest generation of HBM memory, which works closely with NVIDIA's (NVDA.US) AI processors.
Micron executives stated Tuesday that the company's latest products and upcoming next-generation products are helping this American company maintain a leading position. Analysts are optimistic about Micron's growth potential in the data center market, further boosting market optimism for Micron.
On September 11, Micron's stock price achieved its largest single-day gain in four months. At that time, Citigroup analyst Christopher Danely raised Micron's target price to $175, stating that Micron's "guidance will far exceed market expectations" when releasing earnings. Danely noted that Micron benefits from market demand far exceeding expectations, with current demand surpassing production capacity, especially in the data center sector, which accounts for more than half of Micron's revenue.
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