Micron Stock Sees Green Light as Nvidia Confirms Memory Chip Shortages

Micron Technology's stock has fallen 23% from its highs as enthusiasm for artificial intelligence (AI) chips wanes, but Nvidia's comments on memory chip shortages may signal a turnaround.

The company's fortunes have changed dramatically since the pandemic-era semiconductor shortage. Just a few years ago, Micron's gross margin was negative 11%, and its stock price was in the gutter. However, the growing demand for AI chips has boosted demand for Micron's memory products, leading to soaring profits and a surging stock price.

Micron's latest quarter saw revenue of $41.4 billion, up from $9.3 billion in the same period last year, driven by price hikes and sales to AI companies like Nvidia. The company's gross margin was 85% last quarter and 73% over the last 12 months.

Nvidia CFO Colette Kress emphasized on the recent earnings call that the scarcity of memory chips is only increasing, which should benefit Micron. With projected revenue growth for the next calendar year, memory chipmakers like Micron will likely see continued shortages and stellar revenue growth.