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Micron Technology's third-quarter earnings beat expectations: benefiting from the wave of generative artificial intelligence

Update time : 2023-06-30 09:10:48

According to reports, on Wednesday, local time, the U.S. memory chip giant Micron Technology announced its third-quarter earnings, its results exceeded Wall Street analysts' expectations, the main positive from two sources: the wave of generative artificial intelligence pushed up the demand for memory chips (mainly including memory chips and flash memory chips), and in the traditional personal computer and smartphone markets, the supply of memory chips exceeded the demand problem has been alleviated.

Spurred by the positive earnings report, Micron shares rose 3% in the U.S. after-hours trading session (up only slightly during the day's mid-day trading session). Compared to the beginning of the year, Micron shares have risen by one-third. The most important driver for this round of share price gains comes from the industry wave of generative AI, with the market believing that the ChatGPT boom will lead to a boom in generative AI technology and servers, which will drive demand for Micron Technology's memory chips.
For the earnings results, Micron Technology CEO Sanjay Mehrotra (Sanjay Mehrotra) said that the recent accelerated popularity of generative AI technology, artificial intelligence servers for memory chips and memory chips market pull, more than the outside world expected, but at the same time, the mainstream data center server storage chip market, continue to remain sluggish.
Melotra also mentioned that some customers continue to reduce storage chip inventory, which is conducive to the trend of chip price changes, which also brings confidence to the storage chip market, people believe that this industry has come out of the bottom of business growth and total revenue, will go up.
During the global new crown epidemic, consumer spending on smartphones and personal computers saw a round of surge, naturally also boosted the memory chip orders, but after the end of the epidemic, the market demand for these two major devices came to an abrupt end, resulting in a decline in memory chip prices and a sharp increase in inventory in the hands of customers.
U.S. technology industry investment research firm "Summit Insights Group" (Summit Insights Group), the general manager of Chang Jinjin (Kinngai Chan) said they believe that the current round of memory chip inventory adjustment has ended.
Chang said that by understanding the actual situation in the industry, he found positive signs that the demand for storage chips in the market is beginning to stabilize, but in the second half of this year, the three areas of personal computers, smart phones and traditional servers will remain somewhat complex demand for storage chips.
In the third quarter, Micron Technology achieved sales revenue of $3.75 billion, exceeding the average estimate of Wall Street analysts of $3.65 billion. For the fourth quarter, where Micron is currently located, Micron forecasts to achieve revenue of $3.9 billion (within the range of $200 million up and down), which is basically in line with analysts' expectations. In terms of adjusted earnings, Micron reported a net loss of $1.43 per share, below analysts' expectations of a loss of $1.58 per share.

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