Micron can't keep up with its massive demand, and its stock is soaring

By Britney Nguyen

The chip maker has been a victim of souring AI sentiment lately, but its upbeat outlook has Wall Street feeling better about the path forward

Micron reported fiscal first-quarter results on Wednesday.

Micron Technology's stock had gotten swept up in the recent artificial-intelligence selloff - but the company's upbeat revenue guidance now has investors feeling better.

The memory-chip maker (MU) is guiding for revenue of $18.7 billion, plus or minus $400 million, for its second quarter, which far surpasses the $14.3 billion FactSet analyst consensus. The company is also looking for its gross margin to reach 67%, plus or minus 1%, in the current quarter.

And CEO Sanjay Mehrotra expects the business to get even stronger throughout fiscal 2026.

Micron has been a huge beneficiary of the AI boom, which has driven up demand for memory products. With those in short supply, prices have skyrocketed, boosting Micron's top and bottom lines.

With the AI data-center buildout leading to more memory and storage demand, Mehrotra said on the company's earnings call Wednesday afternoon that he believes "aggregate industry supply will remain substantially short of the demand for the foreseeable future."

In the medium term, he added, Micron will only be able to meet half to two-thirds of the demand from several of its key customers, as the need for memory is so strong.

Shares of Micron rose 8% in Wednesday's extended trading session.

If the stock were to close in negative territory in Thursday's regular session, it would be a "terrible sign after that big a guide up," Mizuho trading-desk analyst Jordan Klein told MarketWatch, referring to the company's forecast.

While Micron shares are up 168% so far this year, they fell for five straight sessions in the leadup to Wednesday's report, as investors have come to worry about the health of the AI trade thanks to the financing that key players like Oracle (ORCL) and CoreWeave (CRWV) will need.

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Micron on Wednesday reported fiscal first-quarter revenue of $13.64 billion, above the $13 billion analyst consensus on FactSet. The company's adjusted earnings per share were $4.78, which also topped analysts' expectations for $4.

Mehrotra pointed to "significant margin expansion at the company level and also in each of our business units."

Memory-market conditions have improved in the past few months, positioning Micron to benefit from higher average sales prices than previously expected, Wedbush analyst Matt Bryson said ahead of the company's earnings report. September and October saw "steep gains" in spot prices for dynamic random-access memory chips, he wrote, and manufacturers also raised prices "considerably for smaller customers."

Manufacturers of NAND chips also benefited from higher prices, Bryson added, and gains there were more pronounced in October and November.

See more: Why Micron's stock is Morgan Stanley's new top pick - even with its 180% rally this year

On the earnings call, Mehrotra said Micron had completed agreements on pricing and volumes for its entire supply of high-bandwidth memory for 2026 - including its next-generation HBM4 chip. The company projects a $100 billion total addressable market for HBM in 2028, which is two years ahead of its previous outlook, Mehrotra noted.

HBM is a specialized type of DRAM - but the market forecast implies that it alone could soon come to be worth more than what the entire DRAM market was worth at the end of last year, the CEO added.

Mehrotra also said that the company is making progress in discussions with customers for multiyear contracts, and that it is "focused on maximizing our production output," including by ramping up its technology nodes and investing in more clean room space so that it can add more supply.

-Britney Nguyen

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12-17-25 2016ET