By Adam Clark
Micron Technology has fallen out of favor among investors as a play on the growth of artificial intelligence. Earnings from one of the memory-chip maker's major rivals could revive interest in the stock.
South Korea's SK Hynix reported a first-quarter net profit that more than quadrupled from the same period a year earlier on Thursday. The main source of growth was high-bandwidth memory chips -- a necessary component of the latest AI processors from the likes of Nvidia.
SK Hynix reiterated a forecast that HBM demand will double in 2025 even as it warned that President Donald Trump's tariff policy could create volatility in chip demand in the second half of the year.
The South Korean company is the current leader in HBM chips. It has a market share of close to 50%, according to research firm TrendForce, followed closely by Samsung. But Micron is targeting a 20% to 25% share of the HBM market at some point in 2025, according to analysts at BofA Global Research.
Micron shares were up 0.6% at $73.40 in premarket trading, far below the highs of more than $140 it reached last year when optimism about AI infrastructure was at its strongest.
The question that has dogged Micron's stock is whether growth in HBM chips can offset any cyclical weakness in DRAM -- dynamic random-access memory -- or NAND chips for use in personal computers, mobile phones, and data centers.
SK Hynix's upbeat forecast provides some reassurance on that front. The company dismissed concern that the threat of tariffs would cause stockpiling of goods and therefore hit demand in the second half of the year.
Mizuho Securities analyst Vijay Rakesh reiterated an Outperform rating and $124 target price on Micron stock this week, arguing the company was well positioned in HBM chips.
Micron said last week it would start transitioning to a new business structure along four business lines: a cloud memory division, a core data-center business, mobile and client business, and an automotive and embedded business unit.
"As high-performance memory and storage become increasingly vital to drive the growth of AI, this Business Unit reorganization will allow Micron to stay at the forefront of innovation in each market segment," Micron said in a statement.
Write to Adam Clark at adam.clark@barrons.com
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April 24, 2025 09:04 ET (13:04 GMT)
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