(Reuters) -Micron Technology on Wednesday forecast first-quarter revenue above Wall Street estimates, betting on strong demand for its high-bandwidth memory (HBM) chips used by the AI industry, sending shares of the company rose 10% after the bell.
The company is one of only three suppliers of HBM chips, along with South Korea’s SK Hynix and Samsung, allowing the US company to capitalize on demand for semiconductors that help power generative AI technology.
The rise of AI has also helped Micron cushion the blow from a glut of memory chips in the PC and smartphone markets.
The company expects first-quarter revenue of $8.70 billion, plus or minus $200 million, compared with estimates of $8.28 billion, according to LSEG data.
Micron’s results generally set the tone for the chip sector, as it has a competitive edge and serves a broad customer base that includes the PC, data center and smartphone industries.
The company said in June that its HBM chips were sold out for the calendar years 2024 and 2025. The chips are used in the AI processors designed by Wall Street darling Nvidia.
Micron expects first quarter adjusted gross margin to be 39.5%, plus or minus 1%. Analysts had expected an adjusted gross margin of 37.7%.
For the fourth quarter, the company’s revenue rose 93% to $7.75 billion.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shounak Dasgupta)