(Reuters) – Micron Technology (MU)'s first-quarter revenue forecast beat Wall Street estimates on Wednesday, banking on strong demand for its high bandwidth memory (HBM) chips used in the AI ​​industry, sending the company's shares up 10 percent after the close.

The company is one of only three suppliers of HBM chips, along with SK Hynix of South Korea and Samsung. This has enabled the US company to capitalize on demand for semiconductors that help create generative AI technology.

The AI ​​boom has also helped Micron mitigate the impact of an oversupply of memory chips in the PC and smartphone markets.

According to LSEG data, the company forecast first-quarter revenue of $8.70 billion, plus or minus $200 million. Previous estimates were $8.28 billion.

Micron's results typically set the tone for the chip sector as the company stays ahead of its competitors and serves a broad customer base in PCs, data centers and smartphones.

The company announced in June that its HBM chips were sold out for the calendar years 2024 and 2025. The chips are used in the AI ​​processors of Wall Street darling Nvidia.

Micron expects an adjusted gross margin of 39.5 percent for the first quarter, plus or minus 1 percent. Analysts had expected an adjusted gross margin of 37.7 percent.

In the fourth quarter, the company's revenue increased 93% to $7.75 billion.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shounak Dasgupta)