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Micron beats estimates but hurts forecast

Micron beats estimates but hurts forecast

Beats Hurts

Micron Technology beat estimates for third-quarter revenue on Wednesday, driven by strong demand for its memory chips. However, its current-quarter forecast disappointed investors who had been optimistic about the chipmaker’s performance amid the AI boom. Shares of the Idaho-based firm fell 7.2% in extended trading after Micron forecasted that fourth-quarter revenue was primarily in line with expectations.

The stock had risen 13% this month ahead of the earnings report, fueled by investor optimism that Micron would benefit from AI-driven demand. Micron’s largely inline forecast may have been good enough two or three months ago. Still, it is not enough to meet current lofty hopes, especially after a 67% year-to-date rally in its share price,” said Michael Schulman, chief investment officer at Running Point Capital. The company forecast revenue of $7.6 billion, plus or minus $200 million, for the current quarter, compared with an estimate of $7.6 billion, according to LSEG data.

Micron’s forecast disappoints despite demand

Micron is one of the few providers of high-bandwidth memory (HBM) chips used in the most advanced AI systems, allowing it to capitalize on the surging demand for semiconductors. The company’s results typically set the tone for earnings in the chip sector, indicating demand for various types of chips and end-markets.

We are very optimistic because, after Nvidia, Micron has a bigger exposure to AI growth than perhaps any other semiconductor company,” Micron Chief Business Officer Sumit Sadana said in an interview. The company stated its HBM chips were “sold out” for the 2024 and 2025 calendar years. These chips are used in AI processors designed by Wall Street favorite Nvidia.

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According to LSEG data, Micron reported revenue of $6.81 billion for the third quarter, compared with an estimate of $6.67 billion. Following Micron’s earnings announcement, shares of Nvidia dropped 1.4%, Advanced Micro Devices declined 0.7%, and Intel slipped 0.4%.

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