Memory manufacturer Micron announced on the 11th that it will improve the revenue and profit expectations for the fourth quarter, mainly because the demand for memory chips in artificial intelligence (AI)-based facilities continues to grow. As soon as the news came out, Micron's stock price rose by about 3%, indicating that investors generally believed that Micron had successfully taken advantage of the hot AI car.
Microtron's latest financial report shows that the operating income this quarter reached US$1.12 billion, with the mismatch range of US$10.7 billion, which is far higher than the estimated US$10.7 billion (the mismatch range of US$300 million). After adjustment, gross margin increased from 42% to 44.5%, and EPS also increased from $2.5 to $2.85. Upgrade financial testing mainly benefits from better memory product combinations, especially DRAM's strong pricing.
Of course, the maximum growth force comes from the surge in demand for high-frequency wide memory (HBM). HBM is an AI data center key product that powers large language models and automatic driving systems, among others. Sumit Sadana, chief commercial director of Micron, said that even if Micron makes a price, demand has not decreased. The global end market shows strong pricing trends, so it has achieved significant results in price growth.
Analysts believe that Micron's pricing advantages are directly derived from tight market supply. HBM technology is complex and requires advanced processes. Only a few companies in the world produce energy. Expanding production also takes time and billions of dollars to invest, and rarity brings unusual advantages to memory commerce. Historically, memory merchandising has been troubled by supply in the cycle, forcing price cuts and accepting smaller profits.
But the booming development of AI has changed the situation. Now, demand is growing faster than production capacity, allowing memory companies such as Micron to set higher prices to ensure profitability. Market observers pointed out that Micron not only benefits from AI demand, but also benefits from early investment-advanced HBM development, and signed contracts with leading AI hardware manufacturers to lock in stable and high-value orders.
Large technology companies invest billions of dollars to build AI-centric data centers, which all require a large amount of HBM, and Micron is one of the few companies that can meet their needs. SK Hynix, another major HBM supplier, estimates that the HBM market will grow at a rate of 30% per year by 2030, with long-term profit potential.
Despite the bright future, there will still be challenges in the future. The U.S. plan to charge 100% tax on some imported chips may impact market growth. However, these taxes are not applicable to companies that produce or commit to produce in the United States. Therefore, Micron has made sufficient preparations in this regard.
In June, Micron announced that it would expand its investment of US$30 billion, with a total planned expenditure of US$200 billion. Global AI-based infrastructure construction is accelerating, and Micron Financial Testing shows that it is expected to surpass Huaer Street's expectations by the end of the year and gain market pricing rights that have not been owned in many years.
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