Shares of Micron Technology (MU -1.26%) were trading 6.2% higher by 11:50 a.m. EST, boosted by a fresh set of guidance targets for the first quarter of fiscal year 2021. The memory chip giant's stock had risen as much as 7.1% in earlier trading.
The midpoint of Micron's revenue guidance was boosted from $5.2 billion to $5.73 billion. Gross margins are turning out to be wider than expected. Micron's adjusted first-quarter earnings are now seen landing near $0.71 per share, up from $0.47 per share. Analyst estimates were roughly in line with Micron's guidance midpoints.
The new guidance figures work out to a 48% year-over-year earnings boost and revenue growth of approximately 12%.
Micron's surprisingly strong results rested mostly on huge demand from data center customers. This way, Micron taps into the rising demand for cloud-based services amid the ongoing COVID-19 pandemic, and the servers at the heart of it all require lots of memory chips. Looking ahead, CEO Sanjay Mehrotra said that Micron benefits from a plethora of wide-ranging market trends.
"It's not only about the data center. Look at mobile, 5G," he said in a webcast. "During calendar year '21, as the global economies get past the pandemic and as the economies grow, the need for more memory and storage will continue to broaden."
Micron's stock has now gained 19% year to date and 35% over the last 52 weeks. It's still difficult to call it expensive since Micron shares are trading at a very reasonable 10.5 times forward earnings.