Chip maker Micron Technology’s MU-Q shares jumped 6.3 per cent before the bell on Thursday after it predicted strong recovery in supply-demand balance for memory and flash storage in 2024.
The company’s quarterly results on Wednesday exceeded market expectations and it forecast a strong February quarter in a clear sign that memory chip prices will improve next year to recover from a months-long downturn.
Stock is either at or near normal levels for most of its customers across personal computer, mobile, automotive and industrial markets, Micron said, while data centre inventories will approach those levels in the first half of 2024.
“Market rebounds are happening earlier than we previously thought,” Morningstar analysts said.
Micron’s upbeat results for the quarter ended Nov. 30 as well as its forecast raised similar expectations from other chip companies that would report early next year, lifting their shares.
Nvidia NVDA-Q, Advanced Micro Devices AMD-Q, Qualcomm QCOM-Q, Intel INTC-Q and Broadcom AVGO-Q rose about 1 per cent in premarket trading. Micron also said it was in “the final stages” to qualify its high-bandwidth memory chips for use in Nvidia’s most powerful AI platforms.
Such high-end memory chips are among Micron’s most profitable products and will draw in “several hundred million” dollars in revenue in fiscal 2024, the company said.
Analysts expect AI-fueled demand to help Micron’s rebound.
Rising demand for such chips is “likely to be a tailwind for MU (Micron) for at least the next 2 quarters and likely longer,” Piper Sandler analysts wrote in a note. At least three brokerages raised their price targets after results, LSEG data showed. Micron’s forward price-to-earnings ratio is 32.45 for the next twelve months, compared to the industry’s 21.03.