Micron shares jump on forecast for quicker recovery in chip demand
Reuters
Published Dec 21, 2023 06:54AM ET
Updated Dec 21, 2023 11:06AM ET
(Reuters) -Chipmaker Micron Technology (NASDAQ:MU)'s shares jumped 7% on Thursday after it predicted a strong recovery in the supply-demand balance for memory and flash storage in 2024.
The company's quarterly results on Wednesday exceeded market expectations and it forecast a strong February quarter in a clear sign that memory chip prices will improve next year to recover from a months-long downturn.
Its shares rose as much as $85.99 on Thursday to a near 21-month high. They have gained roughly 60% this year in anticipation of an industry recovery.
Stock is either at or near normal levels for most of its customers across personal computer, mobile, automotive and industrial markets, Micron said, while data center inventories will approach those levels in the first half of 2024.
"Market rebounds are happening earlier than we previously thought," Morningstar analysts said.
Micron's upbeat results for the quarter ended Nov. 30 as well as its forecast raised similar expectations from other chip companies that would report early next year, lifting their shares.
The Philadelphia SE Semiconductor index rose 2%, driven by gains in shares of companies such as Nvidia (NASDAQ:NVDA) , Advanced Micro Devices (NASDAQ:AMD), Qualcomm (NASDAQ:QCOM), Intel (NASDAQ:INTC) and Broadcom (NASDAQ:AVGO).
Micron also said it was in "the final stages" to qualify its high-bandwidth memory chips for use in Nvidia's most powerful AI platforms.
Such high-end memory chips are among Micron's most profitable products and will draw in "several hundred million" dollars in revenue in fiscal 2024, the company said.
Analysts expect AI-fueled demand to help Micron's rebound.
Rising demand for such chips is "likely to be a tailwind for MU (Micron) for at least the next 2 quarters and likely longer", Piper Sandler analysts wrote in a note.
At least 12 brokerages raised their price targets after results, LSEG data showed. Micron's forward price-to-earnings ratio is 32.45 for the next 12 months, compared with the industry's 21.03.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.