After Growing Demand for Data Centers, Micron Provides a Strong Forecast

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The largest memory semiconductor manufacturer in the US, Micron Technology Inc., provided a robust revenue prediction for the current quarter, suggesting that the market for smartphones and PCs is slowly rebounding, but data center demand is making up for it.

Revenue for the fiscal second quarter is expected to be between $5.1 billion and $5.5 billion, the business announced on Wednesday. In contrast, an analyst’s average forecast is $4.99 billion. With some items excluded, Micron’s loss is expected to be between 21 and 35 cents, which is less than the 62 cents analysts had predicted.

After the announcement, the stock increased by almost 4% during extended trading. It had increased by 57% this year, tracking larger increases in semiconductor stocks, thanks to investor confidence that an inventory glut is beginning to ease.

Based on the projections, Micron appears to have recovered from the worst of an industry-wide downturn and is headed back toward profitability. Spending on artificial intelligence is surging, which is beneficial. In order to support the development of AI software, Chief Executive Officer Sanjay Mehrotra has noted a significant need for the pricey memory utilized in data centers.

Additionally, Mehrotra restated his forecast that 2024 will be a rebound year for the sector, paving the way for record-breaking outcomes in 2025. However, he added, the business will hold off on increasing chip output until prices decline.

According to Mehrotra, the company has already sold out of all of the high-bandwidth memory that it is capable of producing in 2024. The kind of lightning-fast access chips that computers using AI software require are those. He claimed that the industry’s “high-revenue, high-profit opportunity” had only recently begun.

After a year of order cuts from PC and smartphone manufacturers, Micron is working to rebound. Customers accumulated excess inventory, which caused memory prices to fall below the cost of production.

After two years of reductions, Micron now projects PC unit volumes to climb by a percentage in the low- to mid-single digits in calendar 2024. The business stated that smartphone demand is beginning to show signs of life and will “grow modestly” in 2024.

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