Micron’s AI-fuelled forecast triggers biggest rally since April

NEW YORK – Micron Technology kicked off its biggest single-day stock gain in more than eight months after delivering an upbeat forecast for the current quarter, signalling that surging demand and supply shortages are allowing the memory chipmaker to charge more for products.

Fiscal second-quarter revenue will be US$18.3 billion (S$23.6 billion) to US$19.1 billion, the company said in a statement on Dec 17. Analysts had estimated US$14.4 billion on average for the period. Excluding some items, profit will be US$8.22 to US$8.62 a share, compared with a projection of US$4.71.

Micron shares surged 10 per cent to US$248.55 in New York on Dec 19, their biggest increase since April 9. The stock had already been up 168 per cent in 2025 heading into the earnings report.

Micron, the biggest US maker of memory chips, is positioned as “an essential artificial intelligence (AI) enabler”, chief executive Sanjay Mehrotra said in the statement. “And we are investing to support our customers’ growing need for memory and storage.”

The voracious appetite for AI computing components is outstripping supply, benefiting companies like Micron. But there also have been shortages of the less sophisticated memory used in personal computers. That stems in part from the memory industry shifting production to more advanced technology for AI data centres. 

“This is the most significant disconnect between demand and supply in terms of magnitude as well as time horizon that we’ve experienced in my 25 years in the industry,” executive vice-president of operations Manish Bhatia said in an interview.

PC makers such as Dell Technologies and HP have warned investors that they expect memory chip shortages in the coming year – bringing higher component prices. That has given Micron more of an upper hand with customers in a frequently volatile industry.

“Memory price increases are unlikely to abate near term,” Bloomberg Intelligence analyst Jake Silverman said in a report.

Investors’ warm reaction to the Micron report set the company apart from Broadcom and Oracle, which jarred shareholders with their results last week.

Concerns about shaky AI spending continued to weigh on those stocks in recent days, and investors were looking to Micron to offer a more reassuring story about AI growth – something it largely pulled off. 

Micron has been a key beneficiary of AI demand because its high-bandwidth memory, or HBM, is critical to the chips and systems that develop AI models. Micron is already sold out of these components for 2026, Mr Bhatia said. 

On a conference call with analysts, Mr Mehrotra said that memory shortages will last for a while. 

“Sustained and strong industry demand, along with supply constraints, is contributing to tight market conditions,” he said. “We expect these conditions to persist beyond calendar 2026.”

The CEO said he was disappointed that he could not fill all the orders. “We are only able to meet about 50 per cent to two-thirds of our demand from several key customers,” he said. “So we remain extremely focused on trying to increase the supply here and making the necessary investments.” BLOOMBERG