03:27 PM EDT, 09/26/2024 (MT Newswires) -- Micron Technology's ( MU ) bullish outlook for the new fiscal year, combined with its strong fiscal fourth-quarter earnings, upended negative sentiment heading into its late-Wednesday earnings release.

Fueled by robust artificial intelligence demand, particularly in the data center space, Micron now sees the market for its high-bandwidth memory, or HBM, products eclipsing $25 billion in the 2025 calendar year, up from an addressable market of $4 billion in 2023 and above previous guidance of $20 billion for next year, executives said late Wednesday on the company's earnings call. HBM is now forecast to be around 6% of overall industry dynamic random access memory bits in 2025, up from 1.5% in 2023.

Strong HBM demand has helped drive interest in the company's data center portfolio, Brian Chin, an equity research analyst at Stifel, told MT Newswires. That's more than offset concerns of softness in its consumer segments, namely PCs and phones, which have been beset by high inventory levels, a trend that's expected to continue.

"One of the fear factors in the cycle was that HBM will move into oversupply next year," Chin said. "They gave no indication they have concern or there is any change in expecting a ramp up in business next year. There's a lot of comfort in that."

Shares were up 15% in Thursday afternoon trading.

Morgan Stanley analyst Joseph Moore said in a note that he's not worried about HBM oversupply, calling it a "design win business, not a gross margin inflated by shortage." Still, he parted with optimists with respect to non-data center supply and demand dynamics.

"The dynamics of excess inventory everywhere -- PC and smartphone (original equipment manufacturers), memory producers, even some of our cloud contacts amid very strong demand -- are OK until they aren't," Moore said. "We saw this dynamic in 2021, when everyone was ignoring inventories climbing in every market until it suddenly mattered for pricing. We aren't seeing that oversupply impact pricing yet, but it seems dangerous to ignore it."

The strong operational outlook fed into a positive forecast for financials, with Micron projecting gross margin expansion and low double-digit revenue growth sequentially for the first quarter of fiscal 2025 even as the consumer segment is expected to continue working through its inventories.

"Overall memory dynamics are likely to improve significantly post (the first quarter of calendar 2025) following the normalization of inventories at client device OEMs," Wedbush analyst Matt Bryson said in a note to clients.

Micron reported fiscal fourth-quarter non-GAAP earnings late Wednesday of $1.18 per share, up from a loss of $1.07 a year earlier and above the Capital IQ consensus of $1.11 per share. Revenue for the quarter was $7.75 billion, up from $4.01 billion in the year-ago period and above the consensus estimate of $7.65 billion.

"We are exiting the fiscal year with excellent momentum, having expanded our industry-leading product portfolio, executed well on pricing, and improved our financial performance significantly from the start of the year," Micron Chief Financial Officer Mark Murphy said on the earnings conference call.

Price: 110.99, Change: +15.22, Percent Change: +15.89