Micron Technology experienced a significant increase of over 13% on Thursday, following a first-quarter revenue forecast that suggested robust demand and pricing for high-bandwidth memory chips (HBM), which are essential for the rapidly growing generative artificial intelligence sector.

As a supplier to Nvidia, Micron is poised to enhance its market capitalization by more than $14 billion.

The company reported its strongest quarterly revenue growth in ten years for the fourth quarter ending August 29, and its outlook for the upcoming period exceeded Wall Street's expectations by a wide margin.

Ryan Detrick, chief market strategist at Carson Group, noted, "If Micron, a higher-cost memory provider, is optimistic about the market, it reflects positively on the entire AI and tech landscape."

This optimistic forecast initially boosted shares of other semiconductor companies, although gains were later reduced following a media report indicating that the U.S. Department of Justice is investigating server manufacturer Super Micro Computer.

Super Micro, a significant client of chip manufacturers, incorporates their products into its servers. Consequently, shares of Nvidia, Intel, and Broadcom, which had risen by more than 2%, saw their gains diminish to only slight increases.

Qualcomm and AMD saw an uptick of approximately 2%. The Philadelphia Semiconductor Index, which had surged over 4% earlier, adjusted its gains to a 2% increase.

Analysts indicated that the expectations for Micron were relatively modest this earnings cycle. Concerns regarding a potential decline in HBM pricing due to increased supply had negatively impacted the stock, with Micron's shares dropping over 20% in the preceding three months.

With those concerns now alleviated, strong HBM pricing is anticipated to bolster Micron's gross margins following a costly expansion of its manufacturing capabilities for these chips.

The company's projections for first-quarter adjusted gross margin surpassed estimates, and it reported a significant improvement in adjusted gross margin for the fourth quarter, reaching 36.5%.

Dan Coatsworth, an investment analyst at AJ Bell, remarked, "It's evident that the AI boom is still thriving, as customers like Nvidia continue to line up for Micron's HBM chips."

High demand leads to elevated prices, enabling Micron to exceed margin forecasts.