Micron Technology Inc. (NASDAQ:MU) said Wednesday that customers are committing billions of dollars years in advance to secure future memory supply amid a prolonged shortage driven by artificial intelligence demand.
Customers Lock In Future Supply
Speaking on the company’s third-quarter earnings call, CEO Sanjay Mehrotra said Micron has signed 16 strategic customer agreements across its data center, consumer and automotive businesses, adding that “the memory industry has been structurally transformed by the proliferation of AI.”
The agreements include about $22 billion in customer commitments, including roughly $18 billion in cash deposits, under contracts spanning up to five years that currently cover about 20% of Micron’s DRAM volume and one-third of its NAND volume, which is expected to eventually account for half or more of its revenue.
Memory Tightness To Continue
The company said it still does not have line of sight into when memory supply will catch up with AI-driven demand.
“We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments, coupled with structural supply constraints,” Mehrotra told analysts.
Much of the world’s advanced memory supply is produced in South Korea, where SK Hynix and Samsung Electronics dominate the high-bandwidth memory market used in AI accelerators.
AI Reshapes The Memory Business
Micron has been one of the biggest winners of the AI boom, with shares soaring 232.23% year-to-date and 719.26% over the past year, despite Tuesday’s 13% selloff during the broader tech rout.
The company said AI demand is expanding beyond data centers into smartphones, PCs, automotive applications, industrial markets and robotics, broadening the long-term market for memory and storage products.
Earnings Beat Wall Street estimates
Micron reported third-quarter revenue of $41.46 billion, topping analyst estimates of $35.59 billion, while adjusted earnings of $25.11 per share beat expectations of $20.63, according to Benzinga Pro.
It expects fourth-quarter revenue of $50 billion, plus or minus $1 billion, versus estimates of $42.95 billion, and expects adjusted earnings of $31 per share, plus or minus $1, versus estimates of $25.50 per share.
Price Action: Shares of Micron closed 0.3% lower at $1,048.51, but gained 15.78% to $1,213.96 in after-hours trading post the results.
Bezninga edge rankings indicate MU has a Momentum score in the 99th percentile and a Growth score in the 82nd percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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