Micron Gains as Demand from Data Centers Drives Robust Outlook

© Reuters.

By Dhirendra Tripathi – Micron Technology (NASDAQ:) stock traded 4% higher in premarket Wednesday after the company gave a robust forecast for the ongoing quarter, suggesting demand from data centers remains strong.

Sales could touch $8.9 billion in the third quarter, the company said. At their worst, they will be $8.5 billion, but still higher than a year ago. Adjusted profit per share could touch $2.47 and will be at least $2.45.

Quarterly gross margin is also seen between 47% and 49% on an adjusted basis.

Micron is looking at a record year in fiscal 2022,” he said in an interview. “Our end market demand is strong, our customers’ demand is strong and supply is constrained,” Bloomberg quoted CEO Sanjay Mehrotra as saying.

Memory chips are now used in a wide range of consumer devices like TVs and washing machines, going beyond their traditional market of computers and smartphones. That’s helped Micron continue to grow even as the PC market slows.

A large part of Micron’s recent growth has come from supplying chips to data centers. That infrastructure has boomed as companies invest heavily in digital ecosystems to cater to customers faster and better.

Data center revenue grew more than 60% in the second quarter. Automation of factories and security systems was behind around 60% growth in industrial sales. Auto revenue set a new record.

While ruling out any impact on production volumes due to the Russia-Ukraine war but given that the region is a supplier of gases and some minerals that go into chips, costs could rise, Mehrotra said.

In the quarter through March 3, Micron’s grew 25% to $7.79 billion. Net income was $2.26 billion, or $2 a share, more than triple what it was a year ago.

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