Micron Technology has issued a bullish outlook for its upcoming quarter, projecting revenue above market expectations as it capitalizes on soaring demand for high-bandwidth memory (HBM) chips.
The company’s optimism comes as the race to build increasingly advanced artificial intelligence systems continues to accelerate, driving a surge in need for powerful and efficient memory solutions.
AI race fuels Micron’s HBM momentum
Micron reported that its HBM revenue reached nearly $2 billion in the fourth quarter, translating into an annualized run rate close to $8 billion.
Chief Executive Officer Sanjay Mehrotra highlighted the figures during a post-earnings call, underscoring the central role HBM is playing in the company’s growth story.
HBM, or high-bandwidth memory, is a type of dynamic random access memory designed with stacked layers to minimize energy use while handling massive amounts of data.
Its architecture makes it particularly well-suited for AI applications, where vast data sets must be processed quickly and efficiently.
Competition among memory manufacturers has intensified, with suppliers vying to secure partnerships with Nvidia, the world’s most valuable company and the leader in AI-focused semiconductors.
Micron already supplies HBM for some of Nvidia’s chips, strengthening its position in the high-stakes market.
Future supply nearly sold out
Looking ahead, Micron expects demand to remain extremely strong.
Mehrotra noted that the company is close to finalizing agreements that would effectively sell out all of its HBM chips for the 2026 calendar year.
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Most contracts related to the HBM3E generation are already complete, while discussions continue around the more advanced HBM4.
Chief Business Officer Sumit Sadana emphasized the pricing power Micron currently holds, telling Reuters, “The pricing on HBM4 is actually significantly higher than the pricing on HBM3E. Because of the very tight industry environment that we are in … we expect a pretty strong return on investment for our HBM business.”
The company has also tapped Taiwan Semiconductor Manufacturing Company (TSMC) to assist in producing the base logic die for its upcoming HBM4E chips, which will be available both as customized and standardized products.
Revenue and margin forecasts exceed expectations
Micron projected first-quarter revenue of $12.5 billion, plus or minus $300 million, compared with analyst expectations of $11.94 billion, according to data compiled by LSEG.
The company also guided for an adjusted gross margin of 51.5%, significantly higher than market estimates of 45.9%.
Kinngai Chan, an analyst at Summit Insights, said the stronger outlook comes down to pricing power. “The margin boost is because pricing is better than expected,” Chan explained.
In the fourth quarter, Micron posted adjusted earnings of $3.03 per share, also surpassing analyst estimates.
Support from U.S. manufacturing incentives
Micron’s expansion efforts are being bolstered by government support through the CHIPS and Science Act.
The company was allocated $6.2 billion under the initiative, which was signed into law under former President Joe Biden to stimulate domestic semiconductor manufacturing.
Recent reports suggest that Commerce Secretary Howard Lutnick is considering reworking the structure of the grants into equity stakes in chipmakers, echoing an earlier arrangement with Intel.
However, Micron does not anticipate any changes to its agreement.
Sadana reassured investors, saying, “The government has been very pleased with our commitment to U.S. manufacturing … we don’t anticipate any changes there.”
In the fourth quarter, Micron received a disbursement from its CHIPS grant after reaching a major construction milestone for its Idaho fabrication plant, Mehrotra said.
Positioned for continued growth
With AI adoption showing no signs of slowing, Micron’s position as a leading HBM supplier places it at the center of one of the fastest-growing segments in technology.
Its ability to secure long-term supply contracts, coupled with favorable pricing and government incentives, has strengthened both its near-term financial performance and longer-term growth prospects.
As competition intensifies and the industry moves toward next-generation memory technology, Micron’s strategy appears designed to capture a significant share of the expanding AI-driven semiconductor market.