"Thank You Micron"... Stock Soars 14% on Earnings That Dispel the 'Semiconductor Winter' Theory
by Byun Seonjin
Published 26 Sep.2024 09:10(KST)
Updated 26 Sep.2024 14:45(KST)
Micron, Essential HBM Supplier for AI Accelerators
Stock Tepid Amid Big Tech AI Bubble Concerns
Morgan Stanley Raises 'Semiconductor Winter' Theory
But Q4 Strong Earnings Propel Stock Up 14%
Peers Like Western Digital Also See Stock Gains
Micron, the largest memory semiconductor company in the United States, announced earnings that exceeded market expectations, causing its stock price to surge 14% in after-hours trading. Micron, along with SK Hynix, supplies high-bandwidth memory (HBM) used in artificial intelligence (AI) accelerators to Nvidia.
Recently, Wall Street analysts have predicted that the semiconductor industry is approaching a peak due to excessive AI investments by major tech companies. However, Micron's successful earnings defense has shifted market attention.
On the 25th (local time), Micron reported quarterly earnings for the fourth quarter of fiscal year 2024 (June to August 2024), with revenue increasing 93% year-over-year to $7.75 billion. This figure surpassed the market consensus of $7.65 billion compiled by FactSet. Earnings per share (EPS) were also recorded at $1.18, exceeding the market expectation of $1.11.
Micron also provided optimistic guidance for the future. The company raised its revenue forecast for the next quarter to $8.7 billion from the previous $8.28 billion, significantly surpassing Wall Street’s estimate of $8.32 billion.
Sanjay Mehrotra, CEO of Micron, emphasized in a statement, “Strong AI demand is driving sales of data center DRAM products, enabling Micron to enter fiscal year 2025 with the best competitive position in its history.” He also projected that the HBM market size will exceed $25 billion by next year.
Micron’s stock had fallen more than 30% over the past three months amid rising concerns about an AI bubble. Recently, even Morgan Stanley contributed to the decline by issuing a report titled “Winter is Coming,” warning of an oversupply of HBM, a key component essential for AI training and inference accelerators. However, Micron dispelled market concerns and surged about 14% in after-hours trading.
As Micron serves as a “barometer for the memory industry,” there are expectations that related semiconductor stocks, which had been sluggish, may resume an upward trend. Western Digital, a U.S. peer, also saw its stock rise 6% in after-hours trading, while Nvidia, which holds 80% of the data center AI chip market, increased by 1%.
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