Micron earnings spark $400 billion AI chip rally on Wall Street
Micron's blowout quarter sent chipmakers up more than $400 billion, but Thursday's PCE inflation reading could quickly cool the AI-led rally.
Micron Technology's blowout fiscal third-quarter results sent chip stocks sharply higher, lifting S&P 500, Dow and Nasdaq futures and setting up a tense morning for Wall Street before the May personal consumption expenditures inflation reading at 8:30 a.m. ET. The market is caught between AI-fueled optimism in semiconductors and an inflation number that could reset rate-cut bets within hours.
Micron said its quarter ended May 28 produced revenue of $41.46 billion, up from $23.86 billion in the prior quarter and $9.30 billion a year earlier. The Boise, Idaho, memory maker reported GAAP net income of $28.24 billion, or $24.67 per diluted share, and non-GAAP net income of $28.86 billion, or $25.11 per diluted share. Operating cash flow reached $25.39 billion. Sanjay Mehrotra's company said the results and outlook reflected the strategic value of memory in the AI era, with investors focused on high-bandwidth memory and other data-center components tied to artificial intelligence buildouts.
The stock reaction was immediate. Micron rose 12% in extended trading after forecasting earnings above analyst estimates, adding to a roughly 700% gain over the past year that pushed its market capitalization past $1 trillion. Qualcomm's upbeat investor-day update, including a push into data-center AI infrastructure and new revenue targets through fiscal 2029, helped extend the move and revived a chip rally that had started to stall as investors questioned how quickly AI spending would translate into profits. The combined Micron and Qualcomm forecasts added more than $400 billion in market value to chipmakers.
The inflation test now hangs over that rebound. April's PCE reading showed 3.8% year-over-year inflation, and the PCE price index, the Federal Reserve's preferred gauge, tracks changes in the prices of goods and services purchased by consumers in the United States. A hotter May print would likely push back expectations for Fed rate cuts, a shift that can filter quickly into retirement accounts and other index-linked portfolios. Asian equities rose on Thursday as traders treated the chip surge as evidence that the AI buildout remained intact, but the breadth of the futures bounce will depend on whether the inflation data confirms or challenges that optimism.
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