Micron forecasts strong revenue on AI boom; higher spending plan knocks shares
By Juby Babu
March 18 (Reuters) - Micron Technology forecast third-quarter revenue above Wall Street expectations after posting a sharp jump in the second quarter on booming demand for memory chips used in artificial intelligence systems, while tighter supply drove record earnings.
But its shares fell 5% in extended trading on Wednesday after Micron said it was boosting its 2026 capital spending plan by $5 billion to keep up with the rising demand.
The company aims to spend more than $25 billion this fiscal year and said spending would rise further in 2027 as expansion in manufacturing facilities could result in construction-related expense climbing by more than $10 billion from 2026.
"Construction activity is really driving a very significant increase in our overall capex," Sumit Sadana, Micron's chief business officer told Reuters in an interview.
He said the company's acquisition of a fabrication plant from Taiwan's Powerchip Semiconductor Manufacturing Corp for $1.8 billion was also pushing 2026 spending higher.
The plant will help boost its output of dynamic random access memory wafers beginning in the second half of 2027. Micron also plans to build a second manufacturing facility at the site.
The higher capex outlook "makes sense, given the shape of the demand and their need to continue investing to meet capacity - which has no signs of easing any time soon," said Ben Bajarin, CEO of Creative Strategies.
Customers are committing to long-term data center investments as technology companies race toward artificial general intelligence.
The resulting growth in capacity is fueling a sharp rise in demand for advanced memory and storage, creating a supply crunch and driving price increases, helping Micron book record profit margins in the quarter ended February.
Micron, whose shares have gained more than 61% this year, is one of the only three major suppliers of high bandwidth memory chips essential to AI technology, along with South Korea's Samsung and SK Hynix.
The chipmaker forecast third-quarter revenue of $33.5 billion, plus or minus $750 million, compared with analysts' average estimate of $24.29 billion, according to data compiled by LSEG.
Revenue of $23.86 billion for the second quarter topped expectations of $20.07 billion. Micron's board also approved a 30% increase to its quarterly dividend.
(Reporting by Juby Babu in Mexico City; Editing by Shailesh Kuber and Arun Koyyur)