AI chip memory increases Micron’s profits

Micron Technology (MU) reported better-than-expected fourth-quarter results. Dan Morgan, senior portfolio manager at Synovus Trust, joins Market Domination Overtime hosts Josh Lipton and Julie Hyman to discuss what the report tells investors about the company.

Morgan explains: “It seems like they're starting to get really good value out of HBM, which is of course the high-bandwidth memory that's used with the AI ​​chip. So we're coming out of a downturn. We've had a couple of good quarters. Now we're reaching the top of the numbers with this AI, and it looks like they've capitalized on it.

Looking at Micron's segments, Morgan highlights the importance of memory driven by demand for AI chips, which has supported the outperforming results. “Smartphones and PCs are not doing so well,” the analyst says. “They're just coming out of the hole, and there are other applications, industrial automobiles and so on. And you're right. If you look at DRAM prices in terms of spot prices, they're kind of balanced… (Micron's) main markets, which are across the board, are flash memory and DRAM chips. Almost everything is still a little muted, right? It's still trying to get going. So if you took out that AI component, the data server space, we probably wouldn't be talking about it because it's just slowly thawing out.”

Morgan hopes the company will provide more details on how it plans to benefit from Nvidia's (NVDA) new Blackwell AI chip, which uses HBM technology. “It's just going to be a question of how much of a positive impact that has.” The analyst suggests that his forecasts are in line with reports that Micron expects HBM to sell out this year and next.

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This post was written by Naomi Buchanan.