Micron Technology Inc., the largest U.S. maker of computer memory chips, declined in late trading after its forecast failed to meet the sky-high expectations of some investors. 

Fiscal fourth-quarter sales will be US$7.4 billion to $7.8 billion, the company said in a statement Wednesday. While the average analyst estimate was $7.58 billion, some projections were above $8 billion. Profit will be about $1.08 a share, minus certain items, versus a projection of $1.02.

Though Micron is getting a boost from the AI computing boom, demand is still sluggish in its traditional markets, such as personal computers and smartphones. The outlook suggests those areas aren’t rebounding from last year’s historic slump as quickly as some had hoped.

The shares fell about 5 per cent in extended trading. Micron had rallied 67 per cent this year before the close, lifted by investor expectations that it will be one of the main beneficiaries of AI spending. 

Chief Executive Officer Sanjay Mehrotra has promised that 2024 will mark a rebound for the industry, and that 2025 will see record sales levels. AI will drive demand for expensive chips that are more difficult to make and use an outsized portion of production resources. That should reduce the risk of future inventory gluts — a longtime bane of the memory industry.

AI models are created by bombarding software with information. The process can involve trillions of parameters and is highly reliant on memory semiconductors. In order to avoid bottlenecks and keep expensive processors working flat out, Micron and its competitors have developed chips that communicate with other components much faster than traditional memory.

Micron competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc. in selling chips that provide short-term memory in computers and phones. They also makes flash memory, which handles longer-term storage in those devices.