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Micron forecasts $61.5 billion in revenue as AI-driven memory demand fuels record results and rising prices
Micron forecast $61.5 billion in quarterly revenue after sales rose 379% to $54.23 billion as AI buyers took every memory chip it could make. Anyone budgeting servers or laptops for next year has good reason to price memory at today's rates until new factories add supply.
The Product Desk · Product desk
What happened
- Analysts had expected $57 billion in first-quarter sales, so Micron's forecast midpoint sits about $4.5 billion above the consensus.
- DRAM revenue rose 343% to $39.8 billion in the fiscal fourth quarter, almost three-quarters of Micron's total sales.
- Net income for the quarter reached $37.7 billion, up from $3.2 billion a year earlier.
- Micron is the only US supplier of high-bandwidth memory for AI hardware, though SK hynix and Samsung hold larger shares of that market.
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Why it matters
- cost Next year, memory-heavy AI hardware will be priced by a supplier whose orders run months ahead of its output, and the budget owner pays for that pricing power.
- constraint Buyers without a long-term agreement queue behind contracted customers for supply, so a purchase order placed late in the budget year has less to draw on.
- decision For each line item, budget owners now choose between committing early at peak prices and waiting for new US capacity that is at least a year away.
The memory shortage showed up in shop prices before it showed up on this earnings call. SiliconANGLE links rising prices on Apple's MacBooks and iPads and Microsoft's Xbox consoles to the AI industry's demand for memory chips [5].
The useful signal is what Micron's customers are doing. They are buying all the memory Micron can make, often months before it can deliver the chips [4]. Investors barely moved the stock after hours, according to SiliconANGLE, because they had expected strong results [10].
Chief executive Sanjay Mehrotra pointed to the contracts behind that demand. "We are increasing our investments in technology, products and manufacturing to help drive SI forward with our customers and our strategic customer agreements provide added confidence in the durability of Micron's financial performance," he said [6]. Andrew Rocco, an analyst at Zacks Investment Research, looked at the same position from outside the company. "Micron's gross margins of 87% demonstrate immense pricing power and dwarf any past cycle," he said. "Additionally, revenue visibility is crystal clear thanks to its hoard of locked-in long-term contracts." [7]
Mehrotra said the quarter just reported set a company record, and the forecast midpoint is about 13% above it [8][1]. That forecast is a revenue figure. The report does not split the increase between higher prices and more chips shipped, so on its own it cannot show whether memory prices will climb further.
New plants are what would ease supply. Micron's two US factories are expected to cost more than $250 billion [9]. The smaller one, in Boise, Idaho, is due online next year. The larger one, in Clay, New York, broke ground in January [9].
In my view, next year's AI hardware budget should carry memory at current prices and count any decline as savings when it arrives. The cost of that choice is money committed early at a possible peak, if Boise eases supply sooner than Micron's order book implies.
Two questions sort each line item. The first is how much of the item's price is memory, and the vendor's bill of materials will show that. The second is whether you need delivery before the new capacity arrives next year. If memory is a large share and you need the hardware soon, commit now at current prices, because Rocco describes Micron's revenue as locked in under long-term contracts [7]. If memory is a large share but the purchase can wait, budget at current prices anyway and ask the vendor for a price-review clause. Items where memory is a small share can follow the normal buying schedule, since the shortage moves little of their total cost.
What to watch
- Micron's next quarterly report, and whether first-quarter revenue lands near the $61.5 billion midpoint.
- Whether SK hynix and Samsung, which hold more of the HBM market, report the same sold-ahead demand.
- Further price increases on laptops, tablets and consoles that device makers attribute to memory costs.