4 Key Takeaways From Micron’s Earnings Call

After Micron Technology (MU) reported fiscal third-quarter profit that missed analysts’ estimates and offered soft revenue guidance, Micron executives joined the company’s earnings call Wednesday, where they discussed their expectations for record revenue in 2024 and 2025, Micron’s position to gain in the artificial intelligence (AI) era, and more.

On Track for Record Data Center Revenue in 2024

Micron CEO Sanjay Mehrotra said Micron’s “mix of data center revenue is on track to reach record levels in fiscal 2024 and to grow significantly from there in fiscal 2025.”

“Robust AI-driven demand for data center products is causing tightness on our leading-edge nodes,” Mehrotra reported, adding that the company expects “continued price increases throughout calendar 2024 despite only steady near-term demand in PCs and smartphones.”

Positioned for AI-Driven Growth

As a computer memory and data storage solution maker, Micron is positioned to gain given AI technology data centers’ memory and storage needs.

“We are in the early innings of a multi-year race to enable artificial general intelligence,” Mehrotra said, adding that AI “will drive significant growth in the demand” for Micron’s memory products.

“Micron will be one of the biggest beneficiaries in the semiconductor industry of the multi-year growth opportunity driven by AI,” the CEO said, telling investors that the company is “well positioned” with its portfolio of memory offerings.

Supply Lags AI-Fueled Demand

Micron said it expects “industry supply to be below demand for both DRAM and NAND,” some of its memory products.

The company also makes high-bandwidth memory (HBM) chips, which are more capable of meeting the advanced computing needs of AI workloads but are more expensive and intensive to make. “The ramp of HBM production will constrain industry supply growth in non-HBM products,” Micron explained.

Micron reported it is “gaining share in high-margin products,” like HBM and data center storage offerings, “demonstrating the strength of our AI product portfolio.”

The company indicated it expects “record revenue and significantly improved profitability in fiscal 2025 will help support average quarterly capex in fiscal 2025,” which is projected to be higher than previous quarters.

The increased spending “will support HBM assembly and test equipment, fab and back-end facility construction, as well as technology transition investment to support demand growth.”

Expanding Customer Base

Micron notably provides AI chipmaker Nvidia (NVDA) with memory solutions for its AI chips, with Micron’s HBM chips used in Nvidia’s AI graphic processing units (GPUs). The partnership positions Micron to share in the AI darling’s gains.

The company also said that in the “2025 timeframe, we expect to be broadening, diversifying our customer base” due to AI-driven memory demand.

Micron said the company is “seeing increased interest from many customers across market segments to secure 2025 long-term agreements ahead of their typical schedule,” given supply constraints and increased demand from AI PCs and AI smartphones.

Micron shares were down 6% at $133.74 as of 11 a.m. ET Thursday, a day after the company’s earnings call. Despite Thursday’s losses, the stock has gained nearly 57% since the start of the year.