Micron Technology beats estimates for third-quarter revenue on AI chip demand

FILE PHOTO: A smartphone with a displayed Micron logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -Chipmaker Micron Technology beat estimates for third-quarter revenue on Wednesday, driven by a surge in demand for its memory chips from the booming AI industry and improved pricing in other markets.

However, shares of the Idaho-based firm fell 7.2% in extended trading after it forecast fourth-quarter revenue largely in line with expectations. Investors had sent the stock up 13% this month, ahead of earnings, on optimism that Micron would benefit from AI-driven demand.

The company forecast revenue of $7.6 billion, plus or minus $200 million, for the current quarter, compared with an estimate of $7.6 billion, according to LSEG data.

Micron is one of the few providers of high-bandwidth memory chips used in the most advanced AI systems, allowing it to cash in on surging demand for the semiconductors.

"We are gaining share in high-margin products like High Bandwidth Memory and our data center SSD revenue hit a record high, demonstrating the strength of our AI product portfolio across DRAM and NAND," Micron CEO Sanjay Mehrotra said.

The company said in March that its entire supply of HBM chips was sold out for 2024, while the majority of the 2025 production had been allocated. The chips are used in the AI processors designed by Wall Street darling Nvidia.

Micron reported revenue of $6.81 billion for the third quarter, compared with an estimate of $6.67 billion, according to LSEG data.

After Micron's earnings, shares of Nvidia dropped 1.4%, Advanced Micro Devices were down 0.7%, and Intel slipped 0.4%.

(Reporting by Harshita Mary Varghese in Bengaluru and Max A. Cherney in San Francisco; Editing by Pooja Desai)