Micron Forecasts First‑Quarter Revenue Above Estimates on AI Demand

Intermediate | October 6, 2025

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Riding the AI Wave: Micron Forecasts First‑Quarter Revenue Growth

On September 23, 2025, Micron Technology announced it expects its first‑quarter revenue to come in at $12.50 billion (± $300 million), outperforming analysts’ average forecast of $11.94 billion. (reuters.com)

This strong performance confirms that Micron forecasts first‑quarter revenue driven by surging demand for its high‑bandwidth memory (HBM) chips—essential components for advanced AI systems. In Q4, Micron’s HBM sales hit nearly $2 billion, implying an annualized run‑rate of about $8 billion. (reuters.com)

Margin Strength and Price Power

Micron is also forecasting a strong adjusted gross margin of 51.5%, well above what many analysts had expected (around 45.9 %). The company attributes this margin strength largely to better‑than‑expected pricing in a tight memory market. These results reinforce that Micron forecasts first‑quarter revenue growth aligned with its higher profit margins. (reuters.com)

Looking Ahead: HBM4, Supply Deals, and Partnerships

Micron expects to sell out its HBM capacity for 2026 within the coming months, securing agreements for HBM3E and negotiating for HBM4 pricing. TSMC is lined up to help manufacture the base logic die for Micron’s HBM4E designs, whether custom or off‑the‑shelf. (reuters.com)

Risks and Policy Factors

Micron also benefits from a $6.2 billion subsidy under the U.S. CHIPS and Science Act. Although there has been talk of revising grant terms into equity stakes, Micron says it doesn’t expect changes to its agreement. Still, competition is steep. Players like SK Hynix and Samsung continue pushing to win AI‑memory contracts (especially from Nvidia). (reuters.com)

Why This Matters for Business & Tech

If Micron’s forecast holds, it suggests AI investment remains a growth engine in semiconductors. Strong memory pricing could reshape the balance of power in the chip supply chain. For companies relying on AI infrastructure—including cloud providers and AI startups—this could mean changes in cost structures and adoption dynamics.

Vocabulary

Forecast (verb / noun) – to predict or estimate in advance
Example: “Micron forecasts first‑quarter revenue above estimates.”
Margin (noun) – the difference between sales and the cost (profit percentage)
Example: “A 51.5% gross margin shows strong profitability.”
Run‑rate (noun) – the projected annual result based on current performance
Example: “HBM revenue of $2 billion in Q4 gives a run‑rate of $8 billion.”
Capacity (noun) – the maximum amount a company can produce
Example: “Micron expects to sell out its HBM capacity for 2026.”
Subsidy (noun) – financial aid by the government to support a business
Example: “Micron benefits from a $6.2 billion CHIPS subsidy.”
Negotiate (verb) – to discuss terms to reach an agreement
Example: “Micron is negotiating pricing deals for HBM4.”
Tight (market) (adjective) – having limited supply relative to demand
Example: “The tight memory market supports strong pricing.”
Outperform (verb) – to do better than expected or better than peers
Example: “Micron’s earnings outperformed analyst estimates.”
Deal (in business) (noun) – a formal agreement or contract
Example: “Micron is locking in supply deals with its customers.”
Competition (noun) – the rivalry between companies trying to win business
Example: “SK Hynix and Samsung pose competition in HBM space.”

Discussion Questions (About the Article)

Why does Micron expect to beat analysts’ revenue forecasts?
What role does HBM play in AI technology, and why is demand rising?
How do margins affect the health of Micron’s business?
What are the risks to Micron’s forecast, either from competitors or policy?
How might customers like Nvidia influence memory chip pricing?

Discussion Questions (Bigger Picture / Business)

How do government subsidies influence innovation in high‑tech industries?
What competitive advantages are critical in semiconductor markets?
How will strong pricing in memory chips affect costs for AI companies?
Do you think Micron’s confidence in HBM4 is realistic? Why or why not?
How might rival firms react to Micron’s aggressive projections?

Related Idiom

“Playing it safe” — to act cautiously, avoiding risks.
Here, Micron is doing the opposite: it’s not playing it safe by forecasting bold revenue and margin growth in a volatile market.

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This article was inspired by Reuters. (reuters.com)