Micron boosts sales outlook as AI drives demand

Micron Technology's Strong Q2 Forecast Signals Industry Shift

Micron Technology Inc., the largest U.S. manufacturer of computer memory chips, has issued an optimistic forecast for the current quarter, highlighting a growing trend where surging demand and supply constraints are enabling the company to command higher prices for its products.

In a statement released on Wednesday, the company projected fiscal second-quarter revenue between $18.3 billion and $19.1 billion. This far exceeds the average analyst estimate of $14.4 billion for the period. Excluding certain items, Micron expects earnings per share to range from $8.22 to $8.62, significantly above the projected $4.71.

Following the release of these results, Micron shares surged approximately 8% in late trading. The stock had already gained 168% this year, closing at $225.52 on Wednesday.

AI Demand Boosts Micron's Position

Micron’s CEO, Sanjay Mehrotra, emphasized the company’s role as “an essential AI enabler.” He stated that the company is investing heavily to support the increasing need for memory and storage solutions among its customers.

The growing demand for AI computing components has outpaced supply, benefiting companies like Micron. However, there are also shortages of less advanced memory used in personal computers. This situation stems partly from the memory industry shifting production toward more advanced technologies for AI data centers.

Manish Bhatia, Executive Vice President of Operations, described the current situation as “the most significant disconnect between demand and supply in terms of magnitude as well as time horizon that we’ve experienced in my 25 years in the industry.”

Impact on PC Makers and Market Dynamics

PC manufacturers such as Dell Technologies Inc. and HP Inc. have warned investors about potential memory-chip shortages in the coming year, which could lead to higher component prices. This scenario has given Micron a stronger position with its customers in an often volatile industry.

Jake Silverman, an analyst at DISCOVERTRENDtelligence, noted in a report that “memory price increases are unlikely to abate near term.”

Investors’ positive reaction to Micron’s results set it apart from other tech giants like Broadcom Inc. and Oracle Corp., which faced shareholder concerns over their recent performance. Micron’s report offered a more reassuring outlook on AI growth, which it largely delivered.

Expanding Production Capacity

Boise, Idaho-based Micron has benefited significantly from the surge in AI demand, particularly due to its high-bandwidth memory (HBM), which is crucial for AI development. According to Bhatia, Micron is already sold out of these components for 2026.

In the fiscal first quarter, which ended on November 27, sales increased by 57% to $13.6 billion. Earnings, excluding certain items, were $4.78 per share. Analysts had predicted revenue of $13 billion and earnings of $3.95 per share.

During a conference call with analysts, Mehrotra indicated that memory shortages will persist for some time. “Sustained and strong industry demand, along with supply constraints, are contributing to tight market conditions,” he said. “We expect these conditions to persist beyond calendar 2026.”

Strategic Investments and Expansion Plans

Mehrotra expressed disappointment over the inability to fulfill all customer orders. “We are only able to meet about 50% to two-thirds of our demand from several key customers,” he said. “So we remain extremely focused on trying to increase the supply here and making the necessary investments.”

To address these challenges, Micron has increased its capital spending projections for this fiscal year to $20 billion, up from a previous forecast of $18 billion. In fiscal 2025, the company spent $13.8 billion on new plants and equipment.

A new Micron plant in Boise will begin manufacturing products earlier in 2027 than previously planned. A second plant in the same location, announced earlier this year, will start construction in 2026 and be operational by 2028. Additionally, the company plans to break ground next year on its first plant in New York state, aiming to begin supplying products from that facility in 2030.