Key facts
- Micron Technology's earnings update and demand forecasts have boosted the AI rally.
- Micron's stock surged approximately 14% overnight.
- Customers have committed $22 billion to secure memory chip supplies.
- The KOSPI index in South Korea jumped over 5% following the news.
- Oil prices have returned to pre-conflict levels seen in late February.
Micron Technology's impressive earnings update and demand forecasts have reignited the AI rally, with its stock surging approximately 14% and easing concerns over stretched valuations. The memory chip maker announced that customers have committed $22 billion to secure future supplies, indicating that demand continues to outpace supply.
This news provided a significant boost to Micron's stock and its South Korean rivals, SK Hynix and Samsung Electronics, which saw their shares surge, lifting the KOSPI index by over 5%. The positive sentiment from the chip sector comes as global crude oil prices have returned to levels seen before the Iran war began in late February.
Despite the positive developments in the chip sector and easing energy prices, bond traders remain cautious. Long-dated Treasury yields were weighed down by rising shipping traffic in the Strait of Hormuz, but two-year Treasury yields remain elevated due to persistent inflation concerns and expectations of at least one Federal Reserve rate hike this year. The upcoming May U.S. PCE inflation data is expected to show core annual inflation ticking higher to 3.4%.