Micron stock jumps 9% as soaring prices from memory crunch lead to quadrupling of revenue

Micron Technology has reported a staggering increase in its revenue, which more than quadrupled in the fiscal third quarter, driven largely by the escalating demand associated with the artificial intelligence sector. Following this announcement, the company's stock surged by approximately 9% during after-hours trading. The memory manufacturer revealed that revenue soared to $39.12 billion, a significant jump from $9.3 billion reported a year earlier. Looking forward, Micron anticipates revenue of around $50 billion for the upcoming quarter, a remarkable rise from $11.3 billion in the same period last year. Analysts had predicted a revenue forecast of $43.58 billion, according to data from LSEG. The sharp increase in memory prices over the past couple of years can be attributed to the high demand for AI chips, which have consumed the limited production capacity of a few vendors. As demand for data centers continues to grow, prices for memory components used in various devices, including smartphones and laptops, are also on the rise. This surge in demand has transformed Micron into a favored stock on Wall Street, especially considering its essential role in supplying technology for major players like Nvidia and Google, along with the servers that support their processors. Over the past year, Micron's stock has skyrocketed approximately 700%, propelling its market capitalization to exceed $1 trillion. In terms of profitability, Micron's gross margin improved to 81.2% in the third quarter, up from 69% in the previous quarter and a mere 27% a year prior. The company reported a net income of $28.24 billion, translating to earnings of $24.46 per share, compared to $1.89 billion or $1.68 per share from the same quarter last year. The focus remains on maintaining strong gross margins and strategic allocations through 2027.