Micron forecast fails to satisfy investors after AI-fueled rally

Micron Technology Inc. shares fell after a generally upbeat forecast from the memory-chip maker failed to impress investors, underscoring Wall Street’s lofty expectations following an extraordinary rally this year.

Fiscal first-quarter revenue will be roughly $12.5 billion, the company said in a statement Tuesday. Though analysts had estimated $11.9 billion on average, some were predicting a number as high as $13 billion. Excluding some items, profit will be about $3.75 a share, compared with a projection of $3.05.

Micron’s stock had nearly doubled this year – rising at a faster pace than most of its chip peers – reflecting AI-fueled optimism. Strong results from Oracle Corp. and Broadcom Inc. also added to the frenzy. Against that backdrop, Micron’s report was a letdown: The stock fell as much as 2.9% in New York on Wednesday.

The world was “preparing for a Micron blowout,” Vital Knowledge wrote in a note. The report and guidance were “strong, but the company faced a very high bar.”

Still, the outlook validates the idea that Micron has become a key beneficiary of AI spending. Its high-bandwidth memory, or HBM, is critical to the chips and systems that develop artificial intelligence models. That’s turned the technology into a particularly lucrative product for the Boise, Idaho-based company.

“In fiscal 2025, we achieved all-time highs across our data center business and are entering fiscal 2026 with strong momentum and our most competitive portfolio to date,” Chief Executive Officer Sanjay Mehrotra said in the statement. “As the only U.S.-based memory manufacturer, Micron is uniquely positioned to capitalize on the AI opportunity ahead.”

Sales rose 46% to $11.3 billion in the fiscal fourth quarter, which ended Aug. 28. Analysts had estimated about $11.2 billion. Earnings were $3.03 a share, excluding some items, compared with an average prediction of $2.84.

Micron said it expects supply of memory chips to remain tight into next year. Demand for data center equipment is stretching the ability of companies to keep up with orders. AI-related business is also fueling demand for storage chips, known as Nand flash, Micron’s second-biggest product line.

The company warned investors that spending will go up as it tries to respond to that market strength. The company spent $13.8 billion on new plants and equipment in its fiscal 2025 and expects to invest more than that in the current financial year.

Micron said it reached price agreements for most of the HBM3e-type memory chips it can make in 2026. And the company is already offering samples of the successor generation of chips, HBM4. Micron expects to sell those products in fixed contracts, helping ensure that revenue is reliable.

Micron remains focused on increasing its profits and is prioritizing that over gaining market share, Manish Bhatia, the company’s head of global operations, said in an interview after the results.

He also sees growing demand for memory chips in the personal computer and phone industries. Those areas had lagged behind data center operators in adopting AI, but that’s now changing, Bhatia said.

HBM is more complex to manufacture, which ties up more equipment in factories for longer than other types of chips. That’s keeping a lid on overall expansion of supply and maintaining a healthy market, he said. The memory chip market has been famous for lurching between booms and busts, with product prices swinging wildly.

Micron and South Korean competitor SK Hynix Inc. also have made gains against market leader Samsung Electronics Co. Both the companies were faster to field the latest generations of HBM memory, which works in close concert with Nvidia Corp.’s AI processors.

Micron executives said Tuesday that their latest products – and forthcoming generations – are putting the US company in the lead.

Micron bullishness had ratcheted up on Sept. 11, when analysts touted the chipmaker’s growth potential in the data center market. That kicked off the biggest one-day rally for the shares in four months.

At the time, Citigroup Inc. analyst Christopher Danely boosted his price target for Micron to $175, saying the company would “guide well above consensus” when it reports results.

Micron has benefited from higher-than-anticipated demand that is outstripping production, Danely said. That’s particularly true in the data center area, which accounts for more than half of Micron’s revenue, he said.