Micron CEO Says Generative AI Is Driving Increased Demand For Chips, Sees Acceleration In 2024 Leading To 'Strong' 2025

Micron Technology, Inc. MU stock got a lift Thursday on the heels of the company’s quarterly results. Following the report, Micron CEO Sanjay Mehrotra discussed the road ahead in an interview with CNBC’s Jim Cramer.

What Happened: Micron reported mixed results late Wednesday, but shares raced higher as investors focused on the forecast. Micron guided for a return to profitability by the May quarter and a return to positive free cash flow by the August quarter.

Thursday on CNBC's “Squawk On The Street,” Mehrotra attributed Micron’s improving financials to the company's ability to capitalize on increasing price trends due, in part, to the improving balance between supply and demand within the chip sector.

Looking Ahead: Mehrotra highlighted the growth of generative AI as a driving force behind the company’s strong guidance.

“AI is driving increased demand for memory in data center applications, as well as across the edge in smartphones, PC, automotive and various industrial applications,” Mehrotra said.

The Micron CEO anticipates a reversal to modest unit growth for sales of PCs, smartphones and servers in 2024 as each unit will require more memory due to their AI capabilities. 

Smartphones and PCs with generative AI capabilities require 4GB to 8GB more memory, which translates to increased revenue for Micron, he said.

Mehrotra also noted that high-bandwidth memory for data centers requires twice as many wafers to produce the same amount of gigabytes as standard memory, leading to higher profitability for the company.

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Mehrotra told CNBC the company plans to focus on maintaining a balance between consumer demand and the supply of chips throughout 2024, which he referred to as a “recovery year.”

“We plan to be extremely disciplined when it comes to supply management and this will all result in a strong 2025,” Mehrotra said.

MU Price Action: According to data from Benzinga Pro, Micron Technology shares closed Thursday up 8.63% at $85.48. 

Image: Courtesy of Micron Technology, Inc.