Micron Technology Inc.’s fiscal third quarter and outlook again surpassed Wall Street’s estimates, thanks to the continuing healthy demand for memory chips, including upcoming autumn launches of new smartphones.
Micron’s stock has been on a tear in the past year, and is up about 44% since January, outperforming the S&P 500 Index
as memory-chip prices have continued to rise amid a tight supply and broad-based demand, including in servers for cloud computing and data centers.
new chief executive, Sanjay Mehrotra, cited the coming introduction of new mobile phones in the fall quarter as one of several catalysts in its outlook, which exceeded current estimates, according to FactSet. Micron said it is looking for revenue in its fiscal fourth quarter to range from $5.7 billion to $6.1 billion, up from the current consensus of $5.6 billion.
“We expect increased demand ahead of anticipated flagship smartphone introductions planned for the fall,” Mehrotra told analysts Thursday on a conference call. He said upcoming features in the new mobile phones, such as multiple camera systems, augmented-reality applications and higher-resolution displays are dictating greater memory-chip densities, from four to six gigabytes.
Many consumers and analysts are expecting Apple Inc.
to launch its next iPhone sometime in the fall. The company signalled that it will include some sort of augmented-reality features in its products in the near future, with its release of a kit for developers at its recent WWDC in June for the creation of games, shopping experiences and other applications in augmented reality, building virtual content on top of real-world scenes.
But even with all the positive news, Micron shares first stumbled and then came back slightly in after-hours trading. Micron executives told investors it is still growing faster than the industry as a whole, and reminded investors that they were expecting DRAM (dynamic random access memory) bit supply growth for the industry in 2017 to fall below its own projected demand.
“For calendar 2017, we expect DRAM industry bit supply growth of between 15% and 20%, slightly below our view of demand growth,” Mehrotra said. “For NAND, we expect 2017 industry supply growth in the high 30% to low 40% range, constraining what would otherwise be higher demand,” Mehrotra said, referring to the type of memory in flash-memory devices like USB drives.
The volatility in its stock, though, is likely to continue, as investors look for the first signs that memory prices are starting to drop or any signs of rising inventories. When one analyst asked about industry inventory levels, Mehrotra said channel inventory levels are “still within healthy ranges.” Micron executives were giving all indications that everything is still good in memory-chip land, but investors are clearly getting nervous.