Source: Caixin.
Nvidia will drive a rapid growth in HBM chip demand, and AI PCs and smart phones will significantly increase memory chip demand. These optimistic speculations will soon face the test of real financial reports. Analysts expect that Micron Technology, which has just emerged from the "cold winter of storage chips," will maintain a "warm-up" trend and give impressive financial guidance.
Just as the AI leader Nvidia's stock price has been fluctuating recently, the global chip and AI market will usher in another "moment of truth" - the global storage giant and Nvidia HBM chip supplier. $Micron Technology (MU.US)$The latest financial report will be released after the close on Wednesday (after 4 a.m. Beijing time on Thursday), and the management will also update the latest situation of the entire memory chip industry chain to the market.
To be precise, Micron needs to tell investors two stories: the recovery of demand for traditional DRAM and NAND chips, and the boosting effect of AI servers on high-bandwidth storage chips.
Financial data is expected to continue to pick up.
From Micron Technology's past three years of financial report curve, it is not difficult to see that Micron and other storage chip manufacturers have just climbed out of the most severe "storage chip winter" in nearly a decade, and its profit data only returned to positive in the last quarter.
According to the analyses of various investment banks, Wall Street expects Micron's revenue for the third quarter of fiscal year 2024 (roughly between March and May of this year) to be $6.67 billion (a year-on-year growth rate of 77.9%), and adjusted EPS to reach $0.53 (compared to a loss in the same period last year).
According to TrendForce's forecast, the contract price of global DRAM chips in the second quarter of this year will increase by 13%-18%. The reasons behind include the “internal circulation” of industry giants such as Samsung and Micron reducing production capacity, and the increasing demand for memory by PCs and high-end smartphones. Trendforce predicts that the market demand growth rate for DRAM and NAND flash memory this year is about 15%, and it exceeds the supply growth rate.
In March of this year, Micron said that new AI PCs now require up to 40%-80% more DRAM chips than current ordinary PCs. At the same time, flagship AI smartphones require 50%-100% more memory than current non-AI smartphones.
Another factor for Micron's growth is the highly anticipated HBM chip by investors. Earlier this year, Micron announced the mass production and supply of HBM3E chips to NVIDIA's H200, and at the March earnings call, the company confirmed that HBM3E chips had generated revenue for the first time and were being "delivered in large quantities."
It is worth mentioning that NVIDIA's Blackwell architecture AI system released earlier this year has increased the capacity of HBM3E chips by 33%.
The company expected that the HBM business would generate "hundreds of millions of dollars" of revenue in fiscal year 2024 and would begin to gain margin benefits from the third quarter. Micron also stressed that HBM supplies for 2024 have already been sold out, and most of the supplies for 2025 have been allocated.
The core issue: how to tell the story of growth.
After announcing its financial report in March of this year, Micron's stock price soared 14% the next day, easily breaking its historical high. Since the last financial report was released, Micron's stock price has risen by 46%, and its year-to-date increase has also reached 65%.
So the market's reaction to tomorrow's financial report will largely depend on the guidance the company gives for future fiscal quarters.
Christopher Danly, an analyst at Citigroup, expects that Micron's revenue guidance for the fourth quarter could reach $8 billion, driven by increased sales of DRAM and NAND chips, bringing it back to pre-"storage chip winter" levels. The consensus estimate from the market is $7.58 billion.
Looking a little further ahead, analysts currently expect Micron's quarterly revenue to surpass $10 billion in the fourth quarter of fiscal year 2025. Of course, in accordance with the tradition of "AI concept stocks," Micron's stock price needs to keep analysts' expectations rising in order to achieve further gains.
Finally, investors will also be closely watching Micron's expansion progress. According to the latest news last week, Micron is expanding (or planning to expand) its HBM production lines in multiple production bases around the world, with the goal of expanding its global HBM market share to 20%-25% by 2025. By comparison, Micron's global HBM wafer capacity accounted for only 3% last year.
Editor/tolk