© Reuters. FILE PHOTO: A smartphone with the Micron logo placed on the motherboard of a computer in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
By Medha Singh and Aditya Soni
(Reuters) – Memory chip maker Micron technology (NASDAQ hit a record high on Thursday after its strong revenue forecast stoked optimism that rising demand for artificial intelligence hardware would drive Nvidia supplier (NASDAQ to new highs.
The stock was last up 15%, lifting the broader Philadelphia Chip Index 3% higher. Micron, which reports earnings ahead of its peers, helps gauge broader demand for semiconductors.
The company said on Wednesday that its high-bandwidth memory (HBM) chips, which refer to ultra-fast semiconductors used in developing artificial intelligence applications, were out of stock by 2024. Most of its supply was also allocated for 2025, he added.
“Memory is a key beneficiary of ai adoption and we expect a V-shaped recovery in the industry, with revenue expected to grow 55% in 2024 and 35% in 2025,” said Mark Haefele, director of investments of UBS Global Wealth Management. .
Micron, one of two suppliers of HBM chips to Nvidia along with South Korea's SK Hynix, was set to add nearly $16 billion to its market value, based on its stock price of $110.92.
On Wednesday, ahead of the results, Micron was trading at about 24 times its 12-month earnings estimates, compared with 14.53 for its smaller rival. Digital West (NASDAQ:).
Micron shares have risen more than 60% in the past 12 months, boosted by investor confidence that the company will increase its share of HBM's high-margin market this year and next.
Micron's chief commercial officer, Sumit Sadana, told Reuters on Wednesday that the company had won new customers for its HBM products that it had not yet announced.
Its current quarter guidance for an adjusted gross margin of 26.5%, plus or minus 1.5%, was also above market estimates of 20.8%, as relatively new HBM chips are in short supply. , which gives companies like Micron more pricing power.
“Tight supply, rising demand, normalization of excess inventory, along with HBM's increased size, are driving dramatic price improvements,” analysts at Piper Sandler said.
