Surge in AI Chip Demand Drives Micron Technology's First Revenue Growth in Six Quarters
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Micron Technology announced its first revenue growth in six quarters, with the positive news partly attributed to the surge in demand for AI chips, making it a promising investment target in the AI sector.
On Wednesday, Micron Technology announced that its first-quarter financial results exceeded analysts' expectations, with revenue reaching $4.7 billion, a 16% increase from $4 billion a year ago, marking its first revenue growth in six quarters. Micron's stock price rose 4% in after-hours trading.
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Although the company still reported a net loss of $1 billion, it forecasts a return to profitability in the third fiscal quarter. What excites investors even more are Micron Technology's comments about its new memory chip module, HBM3E. This new module, designed for artificial intelligence and supercomputing, will begin mass production in early 2024 and is expected to generate hundreds of millions of dollars in revenue for the company in fiscal year 2024.
Micron Technology CEO Sanjay Mehrotra told analysts, 'I just want to point out that our HBM supply is essentially—for the calendar year 2024—already sold out.' Beyond its potential in data centers, Micron also sees significant opportunities for memory chips in AI-capable PCs or mobile devices, where AI will be used locally without relying on expensive data center operations. This will require more PC memory.
Mehrotra also stated: "For PCs, we forecast low to mid-single-digit percentage growth in unit sales for the 2024 calendar year, following two years of double-digit percentage declines in PC sales." He mentioned that PC manufacturers are expected to begin mass production of AI PCs in the second half of 2024, which will require an additional 4 to 8 gigabytes of DRAM capacity per PC, along with increased solid-state drive (SSD) capacity.
Additionally, he noted that in the long term, many popular generative AI applications will emerge on smartphones. "Our leading product portfolio will capture this memory and storage opportunity," he added.
To meet the manufacturing demands of the new HBM3E modules, Micron Technology will increase its capital expenditures in fiscal year 2024. Despite this, company executives emphasized they remain "highly disciplined" in their capital spending.