Micron surges as chipmaker looks to piggyback on Nvidia AI demand
Updated at 9:40 AM EST
Micron Technology (MU) moved higher in early Monday trading after the group said it would start ramping up the shipment of a key addition to Nvidia's new AI-focused chips.
Nvidia, (NVDA) which crushed Wall Street's earnings forecasts last week and predicted better-than-expected near-term sales tied to the ongoing surge in AI demand, will start delivering a new, more powerful chip to customers later in the spring.
The new chip, the H200, nearly doubles the inference performance of H100, Nvidia told investors last week, as it looks to cement its position as the most important player in the AI infrastructure market.
"The world has reached the tipping point of [a] new computing era," Nvidia's chief financial officer Colette Kress told investors last week. "The $1 trillion installed base of data-center infrastructure is rapidly transitioning from general purpose to accelerated computing."
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Micron, meanwhile, is looking to piggyback on the spending surge as part of a developing deal with Nvidia that will see its its high-bandwidth-memory, or HBM, chips embedded in the new H200 semiconductors.
Micron told investors in December that the shipments could generate "several hundred millions of dollars of HBM revenue in fiscal 2024," with continued growth in 2025.
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Micron hopes to ride Nvidia's AI coattails
"AI workloads are heavily reliant on memory bandwidth and capacity, and Micron is very well-positioned to support the significant AI growth ahead through our industry-leading HBM3E and HBM4 roadmap, as well as our full portfolio of DRAM and NAND solutions for AI applications,” said Micron's chief business officer, Sumit Sadana.
Micron said its HBM addition not only improves performance, but also helps reduce overall power consumption, a key factor in enabling AI strategies to develop given their massive computing needs.
The International Energy Agency notes that data centers and their network offshoots consume around 1.5% of all global computing power. And that tally is expected to grow rapidly over the coming years as hyperscalers overhaul their current systems with new and more powerful chips.
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Micron, which reports second quarter earnings on March 20, told investors in December that it expected to post a loss of around 28 cents a share. Group revenue were forecast in the region of $5.3 billion, thanks to what it saw as improving demand linked to the surge in AI-related technologies.
"We are in the very early stages of a multiyear growth phase catalyzed and driven by generative AI, and this disruptive technology will eventually transform every aspect of business and society," said Micron CEO Sanjay Mehrotra.
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"Memory is at the heart of GPU-enabled AI servers, and we are already seeing strong demand driven by early deployment of AI solutions, which will only accelerate over time," he added.
Micron shares were marked 6.5% higher in early Monday trading to change hands at $91.58 each, a move that would extend the stock's six-month gain to around 40%.
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