Micron forecasts strong AI-led revenue, hikes spending; shares slide
Synopsis
Micron projected robust revenue growth on AI-driven demand while boosting capital spending plans, sending shares lower.
Micron Technology forecast third-quarter revenue above Wall Street expectations on strong AI-driven demand for memory chips, but its shares fell after the company unveiled a sharply higher capital spending plan to expand capacity.
Key highlights
- Micron Technology forecasts strong Q3 revenue above estimates
- Shares fall 5% on higher capital spending plan
- 2026 capex to rise by $5 billion
- AI demand drives record earnings and margins
- Expansion plans include new Taiwan facility
AI boom drives strong revenue outlook
Micron projected third-quarter revenue of $33.5 billion, plus or minus $750 million, well above analysts’ estimate of $24.29 billion, according to LSEG data.
The company also reported second-quarter revenue of $23.86 billion, beating expectations of $20.07 billion, as demand for memory chips used in artificial intelligence systems surged.
Higher spending plan weighs on shares
Despite strong results, Micron’s shares fell about 5% in extended trading after it said it would increase its 2026 capital expenditure by $5 billion.
The company now expects to spend more than $25 billion this fiscal year, with further increases
planned for 2027 as it expands manufacturing capacity.
Expansion plans drive capex surge
Micron said construction-related expenses could rise by more than $10 billion from 2026 levels due to ongoing facility expansion.
The company is also investing in new manufacturing capabilities, including a recently acquired fabrication plant in Taiwan.
Taiwan acquisition to boost output
Micron’s $1.8 billion acquisition of a fabrication facility from Powerchip Semiconductor Manufacturing Corp will support increased production of DRAM wafers from the second half of 2027.
It also plans to build a second manufacturing facility at the same site to further expand output.
Tight supply boosts margins
Strong demand from data centre investments and the race toward artificial general intelligence has created a supply crunch in advanced memory and storage.
This has driven price increases and helped Micron deliver record profit margins in the latest quarter.
Industry dynamics support growth
Micron remains one of the three major suppliers of high-bandwidth memory chips, alongside Samsung Electronics and SK Hynix.
Analysts said continued investment is necessary to meet rising demand, with no signs of slowdown in AI-related spending.
What next for Micron?
Micron’s outlook will depend on sustained AI demand and its ability to scale production efficiently.
While higher spending may pressure shares in the short term, long-term growth prospects remain tied to the expanding AI ecosystem.
FAQs
Q1: Why did Micron shares fall despite strong results?
Shares dropped after the company announced a significant increase in capital spending.
Q2: What is driving Micron’s revenue growth?
Strong demand for memory chips used in AI systems is boosting revenue.
Q3: How much is Micron planning to spend?
It plans to spend over $25 billion this fiscal year, with further increases expected.
Q4: Who are Micron’s main competitors?
Key competitors include Samsung Electronics and SK Hynix.
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