Micron surges on upbeat profit forecast as chip prices soar

By Akriti ‌Shah

Dec 18 (Reuters) - Micron Technology's shares rose 9% in premarket trading on Thursday ‍after the ‌U.S. chipmaker delivered an outsized quarterly profit forecast, underscoring its leadership in the high-bandwidth ⁠memory chips market as prices surge.

Micron ‌is one of only three major suppliers of high-bandwidth memory chips, alongside Samsung and South Korea's SK Hynix. The chips are pivotal for training and deploying generative AI models.

The company forecast second-quarter ⁠adjusted profit at nearly double Wall Street expectations, underscoring how Micron is capitalizing on a global supply crunch ​for memory chips amid booming demand from data centres, ‌propelling its shares higher by about 168% ⁠so far this year.

In a conference call with investors, Micron CEO Sanjay Mehrotra said he expects memory markets to remain tight past 2026 and that in ​the medium term, Micron expects to meet only half to two-thirds of demand from several key customers.

Micron's chief business officer declined to specify which customers would not receive the chips they sought.

"With supply tightness at unprecedented levels, MU is having to strike ​a ‍fine balance between allocating wafer ​capacity to high-value bits while also providing adequate supply of less value-added bits to key strategic customers," J.P. Morgan analysts said in a note.

Shares of chipmakers AMD and Nvidia rose nearly 1% each in premarket trade.

Micron has been retooling its production facilities to prioritize surging demand from AI data centres. 

Earlier this month, the company announced it will ⁠dissolve its direct-to-consumer memory chip business under the Crucial brand, sharpening its focus on high-value enterprise and AI customers.

The company also ​increased its 2026 capital expenditure plans to $20 billion, as it ramps up investments to meet booming AI-driven demand. 

J.P.Morgan expects incremental capacity additions to be snapped up by customers.

Micron has a 12-month forward price-to-earnings ratio of 10.81, compared ‌to SK Hynix's 7.21 and Samsung's 9.62.

(Reporting by Akriti Shah and Siddarth S in Bengaluru; additional reporting by Danilo Masoni in London; editing by Samuel Indyk and Mrigank Dhaniwala)