2024-03-20 21:01

Micron's adjusted per-share profit ended five straight quarters of losses Pricing continues to improve across the memory chip market Shares up more than 16% after hours March 20 (Reuters) - Memory chip maker Micron Technology (MU.O) , opens new tab tapped a surge in artificial intelligence adoption to forecast third-quarter revenue above estimates on Wednesday and post a surprise quarterly profit. Its shares shot up more than 16% in extended trading, adding to a rise of more than 60% over the last 12 months. Micron's stock was last at about $110, and a close at that level on Thursday would be its highest ever. The strong report and forecast underscore surging demand for high-end memory chips and other advanced semiconductors as big tech companies race to incorporate generative AI. Micron's high bandwidth memory (HBM) chips, which are used in the development of complex AI applications, were sold out for 2024 and a majority of 2025 supply had already been allocated, CEO Sanjay Mehrotra said. AI chip front-runner Nvidia (NVDA.O) , opens new tab has also tapped Micron for the latest HBM 3E chips in its next-generation H200 graphics processing units (GPUs). South Korean competitor SK Hynix (000660.KS) , opens new tab has been the sole supplier of HBM chips to Nvidia so far. Micron's chief business officer, Sumit Sadana, also told Reuters that the company had signed up new customers for its HBM products that it is yet to announce. The adjusted per-share profit reported on Wednesday was Micron's first after five straight quarters of losses, according to LSEG. Analysts expect its share of the high-margin HBM market to grow throughout the year. Micron offers flash memory chips that serve the data storage market and dynamic random access memory (DRAM) made for data centers, personal computers, smartphones and other computing devices. "The impressive earnings and forecast from Micron suggest that GenAI momentum is spurring an important growth era for DRAM and, most importantly, HBM suppliers," said Bob O' Donnell, chief analyst at Technalysis Research. The company's results, reported ahead of other chipmakers, are watched as a gauge of demand for various types of chips and end-markets. Its upbeat forecast sent shares of peer Western Digital (WDC.O) , opens new tab up 4.6% in extended trade. HBM revenues are expected to add to Micron's gross margins in the third quarter, Mehrotra said, reiterating that the company was on track to generate several hundred million dollars of revenue from the advanced chips in fiscal 2024, a small but growing fraction of its total sales. Micron expects adjusted gross margin for the third quarter to be 26.5%, plus or minus 1.5%, compared with market estimates of 20.8%. It forecast revenue of $6.60 billion, plus or minus $200 million, for the current quarter, largely above estimates of $6.03 billion, according to LSEG data. The company posted adjusted profit of 42 cents per share for the second quarter, compared with estimates for a loss of 25 cents. Mehrotra also said Micron's bit supply growth in fiscal 2024 remains below its demand growth for both DRAM and NAND. Pricing across all memory and storage end markets is improving as well, Mehrotra said, adding that the company expects DRAM and NAND pricing levels to increase further throughout 2024. Memory chip pricing is on the rebound after hitting some of its lowest levels in years as a pandemic-led buying spree ultimately resulted in a supply glut. Micron reported second-quarter revenue of $5.82 billion, compared with estimates of $5.35 billion. The Technology Roundup newsletter brings the latest news and trends straight to your inbox. Sign up here. https://www.reuters.com/technology/micron-forecasts-third-quarter-revenue-above-estimates-ai-demand-2024-03-20/

2024-03-20 20:57

WASHINGTON, March 20 (Reuters) - The Federal Reserve is nearing a decision on slowing the pace of its balance sheet run-off, central bank Chair Jerome Powell said on Wednesday, a tapering move that may allow it to shed more bonds than it once expected. Powell's remarks, the most explicit so far about plans to slow a process that has seen about $1.4 trillion of bonds roll off the Fed's balance sheet, was seen by several Wall Street analysts as a signal that a tapering plan will be unveiled as early as the Fed's next meeting on April 30-May 1. "It will be appropriate to slow the pace of run-off fairly soon," Powell said at a press conference following a Federal Open Market Committee meeting. He did not offer a specific time frame for the decision, saying only that officials are now debating the issue. Powell was addressing the central bank's ongoing efforts to reduce the size of its holdings, commonly referred to as quantitative tightening, or QT. Officials aggressively increased the central bank’s balance sheet as part of the response to the coronavirus pandemic. Starting in the spring of 2020, the Fed bought Treasury and mortgage bonds in great numbers, first to stabilize financial markets and then to provide stimulus when the Fed’s interest rate target was at near zero levels and could be cut no further. That quantitative easing, or QE, caused Fed holdings to more than double, topping out at $9 trillion by the summer of 2022. The Fed began to shrink the size of its holdings later that year, having embarked in March 2022 on what would be a robust campaign of interest rate increases aimed at bringing high levels of inflation back to its 2% target. Since the fall of 2022 the Fed has been allowing up to $60 billion per month in Treasuries and $35 billion per month in mortgage bonds to expire and not be replaced. The Fed is seeking to reduce the size of its holdings in a way that will ensure the financial system has enough liquidity for the Fed to retain firm control over the federal funds rate, its chief tool to influence the economy’s momentum, and to allow for normal levels of volatility in money market rates. To achieve that, Fed officials have been signaling for some time that they would first lay out a plan to slow, or taper, the pace of QT given uncertainty over how far they’ll need to shrink their overall holdings. Officials are mindful of the events of September 2019, when a QT effort then in play unexpectedly drew too much liquidity out of the financial system, causing significant interest rate churn, requiring the Fed to add liquidity back by once again expanding , opens new tab its balance sheet. Thomas Simons, economist at investment bank Jefferies, said in a note that Powell’s comments may have moved forward the start of the tapering process. “We had been thinking that the tapering of QT would begin in June or July, but this guidance suggests that perhaps the announcement could come sooner, possibly the next meeting on May 1,” he wrote. Simons' view was echoed by others. "We now expect the Fed may make this announcement as early as the May FOMC meeting, ahead of our previous expectation of a June announcement," Tiffany Wilding, managing director and economist at PIMCO, said in a note. In his press conference, Powell said slowing the drawdown from its current pace may allow the central bank to compress the size of its holdings by a greater degree. "We may actually be able to get to a lower level because we would avoid the kind of frictions" that might happen by shedding bonds too quickly, he said. Powell noted the endgame for Fed holdings envisions a level of banking sector liquidity that's large enough to navigate normal volatility and periods of stress. But he cautioned there's no easy rule-of-thumb for stopping QT, saying "there's not a dollar amount or percent of GDP or anything like that" to look to. Ahead of the FOMC meeting, a bare majority of economists in a Reuters poll had been expecting the QT taper process to begin in June and wrap up early next year. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/feds-powell-says-balance-sheet-drawdown-taper-coming-soon-2024-03-20/

2024-03-20 20:33

HOUSTON, March 20 (Reuters) - A promising area off Colombia's coast where Brazil state-run Petrobras (PETR4.SA) , opens new tab is drilling this year could justify a large project to supply natural gas to the Andean country and for exports, Petrobras' head of exploration and production said on Wednesday. As oil production in Brazil's prolific presalt region is set to plateau in coming years, Petrobras is expanding its horizons to new frontiers including the Equatorial Margin, Colombia and Africa. At Colombia's Tayrona block, Petrobras and Colombia's state-run Ecopetrol (ECO.CN) , opens new tab will drill two wells this year following a gas discovery at the Uchuva-1 well in 2022. Future analysis will determine the type of project needed, said Joelson Mendes, Petrobras' chief exploration and production officer. "There could be more gas than what Colombia needs," Mendes told Reuters in on the sidelines of the CERAWeek energy conference in Houston. Colombia's government has asked Petrobras to speed up the project, he added. He expects the evaluation of the wells to be ready by the beginning of 2025 and the project will then be submitted to Petrobras' board for its consideration. If a positive final investment decision is made, first gas could come earlier than the 2029 goal initially set, Mendes said. Petrobras will wait for the well appraisal results to plan the project's size and gas commercialization, including the possibility of setting up liquefied natural gas (LNG) facilities, the executive said. A gas deficit in the Andean country is growing, leading to more purchases of LNG and possibly imports from Venezuela if an idled gas line is repaired. That $40 million project will need authorization from the U.S. Treasury Department, Ecopetrol CEO Ricardo Roa said this week. Mendes said that despite exploration success outside Brazil, the company will continue to focus on trying to find new frontiers for oil and gas in its basin, including the environmentally sensitive Equatorial Margin. "According to some scenarios, our production will peak in the next 10 years. We need new discoveries," he said. "Some people think presalt will last forever. It won't." Petrobras also continues looking at opportunities for exploring in Guyana and Suriname, Mendes said. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. https://www.reuters.com/business/energy/ceraweek-petrobras-exec-says-offshore-colombia-project-could-find-enough-gas-2024-03-20/

2024-03-20 20:26

HOUSTON, March 20 (Reuters) - Suriname's state-owned oil company Staatsolie has begun talks with oil majors Exxon Mobil (XOM.N) , opens new tab and TotalEnergies (TTEF.PA) , opens new tab to encourage joint development of natural gas fields that straddle its and Guyana's maritime borders, the head of its state oil firm told Reuters late Tuesday. The early-stage discussions are part of Suriname's efforts to increase foreign investment in its energy production and turn the South American nation into a regional gas hub. Its first major oil production from offshore is about four years away. To Suriname's west, an Exxon-led consortium in Guyana has quickly ramped oil output to about 650,000 barrels per day (bpd). The group is in discussions with the Guyanese government to develop as-yet untapped gas fields. Guyana has said it wants the group to tap the fields for domestic supply and exports, and generate a second stream of energy revenue for the country. The Exxon consortium has outlined six projects in Guyana, where it has confirmed more than 11 billion barrels of recoverable resources, mainly for production of more lucrative crude oil. A seventh project could be the group's first to mainly focus on gas. Two of Exxon's discoveries in Guyana, which contain mostly natural gas and gas condensate, are near two Suriname fields where TotalEnergies and APA Corp (APA.O) , opens new tab found gas, Staatsolie Managing Director Annand Jagesar said in an interview at the CERAWEeek energy conference in Houston. "We've been talking to Total. They don't see an opportunity to make a feasible project as of yet from Maka and Kwaskwasi (two discoveries off its coast). Joining the Guyana and Suriname explorations, our projects, we can make that scale", Jagesar said. Differences in taxation and other fiscal terms between the two countries are also among the challenges that must be addressed before any joint gas development can take place, he said. Exxon and TotalEnergies spokespeople declined to comment. GAS POWER Even though the first project in Suriname scheduled to begin offshore output - TotalEnergies and APA's Block 58 - initially will be focused on oil, the country sees itself as a potential gas hub for the region. "There is a golden lane," Jagesar said referring to a belt of offshore oil and gas reserves stretching from Brazil to Guyana and known as the Equatorial Margin. "The sweet spot is in Guyana, that's the best reservoir... It looks like we have more gas," Jagesar said. TotalEnergies and APA aim to make a final investment decision on developing Block 58 later this year, with a goal of first oil output by 2028. But the project's planned $9 billion tag could rise as drilling costs have increased globally, Jagesar said. "Two years ago, drilling costs were like $200,000 a day. Now it's like $400,000," he added. The next project to inaugurate offshore output could be Block 52, where Malaysia's state oil firm Petronas (PETR.KL) , opens new tab and partner Exxon plan to further explore the area. They have arranged to drill an appraisal well and do production tests, Jagesar said. Petronas could pursue a liquefied natural gas (LNG) project using Suriname's gas if discoveries allow. Petronas and Staatsolie have agreed to special fiscal terms through a contract addendum that will give the company a tax-free period of ten years from the start of production. Those negotiations could be extended to other companies, the executive said. Big producers from neighboring countries like Brazil's Petrobras (PETR4.SA) , opens new tab are looking at opportunities in Suriname, said the company's exploration and production head, Joelson Mendes, on Wednesday. In shallow waters, Suriname has signed production sharing contracts with firms including U.S. oil major Chevron (CVX.N) , opens new tab and QatarEnergy for 4 blocks. Following a new bidding round recently launched, the total of blocks allocated could be increase to 21-22, Jagesar said. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. https://www.reuters.com/business/energy/ceraweek-suriname-presses-exxon-totalenergies-combine-gas-developments-2024-03-20/

2024-03-20 19:56

March 20 (Reuters) - Shares of Astera Labs jumped as much as 76% in their Nasdaq debut on Wednesday, giving the chip firm a market capitalization of $9.68 billion, as it tapped into the investor enthusiasm for artificial intelligence. The stock traded as high as $63.50, after opening at $52.56 each, versus its initial public offering (IPO) price of $36 apiece. The stock was last up 69% at $60.88. Chip companies are seen as the main beneficiaries of the AI boom as businesses race to adopt the technology, bolstering the demand for advanced semiconductors used in data centers. Astera is the first big technology firm to list this year amid a stuttering rebound in the U.S. IPO market. Its strong debut shows Wall Street's demand for AI-linked companies remains strong, even following a 12.9% jump in the Philadelphia Semiconductor (.SOX) , opens new tab index so far this year. The company, the name of which is inspired by astronomy and means "star-like", sells high-speed data transfer technology for artificial intelligence computing and other cutting-edge data center applications. It competes with chip companies such as Broadcom (AVGO.O) , opens new tab, Marvell Technology (MRVL.O) , opens new tab and Parade Technologies (4966.TWO) , opens new tab. "We are just in the early innings of AI," said Astera CEO Jitendra Mohan. "We like to think at least that the bottleneck for AI is now shifted from compute to connectivity." "Hot areas like AI can make for some very volatile IPOs. So in order for Astera to maintain a premium valuation post-IPO, it will need to hit its growth targets and improve profitability," said Matthew Kennedy, senior strategist at Renaissance Capital. Social media platform Reddit's long-awaited market debut is slated for Thursday, while cybersecurity software startup Rubrik is planning to list as early as April, Reuters reported last month. Astera, along with some of its existing investors, raised $712.8 million by selling 19.8 million shares priced at $36 each, above the marketed range in its upsized U.S. IPO. Get U.S. personal finance tips and insight straight to your inbox with the Reuters On the Money newsletter. Sign up here. https://www.reuters.com/markets/deals/astera-labs-shares-jump-46-strong-nasdaq-debut-2024-03-20/

2024-03-20 19:39

WASHINGTON, March 20 (Reuters) - The Congressional Budget Office said on Wednesday that U.S. deficits and debt will grow considerably over the next 30 years as interest costs mount, but the outlook had improved from forecasts made last June due to spending limits passed by Congress and stronger projected economic growth. The CBO's latest long-term budget projections , opens new tab based on current laws show federal deficits rising to 8.5% of gross domestic product in fiscal 2054 from 5.5% in fiscal 2024. The CBO in June projected the fiscal 2053 deficit at 10.1% of GDP. The projections also show U.S. public debt will climb to 166% of GDP in 2054 from 99% in 2024, but this is down considerably from the June projection of 2053 debt at 181% of GDP. The results were largely in line with CBO's Feb. 7 forecast of a slightly smaller fiscal 2024 deficit, but the improved outlook did not sway budget hawks in Washington who said it was still unsustainable. "There is no way to look at these eye-popping numbers without realizing we need to make a change," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a fiscal watchdog group. "And yet we have lawmakers promising what they won't do: I won't raise taxes, I won't fix Social Security, I won't pay for all the things I do want to do. And so we continue on this dangerous path," MacGuineas added. President Joe Biden's proposed fiscal 2025 budget would raise taxes by nearly $5 trillion over the next decade on wealthy Americans and corporations, but would also increase spending on social priorities such as child care, for a net 10-year deficit reduction of about $3 trillion. However, the CBO's projections assume no changes to current tax and spending laws for the next 30 years, and include the effects of individual tax rates reverting to higher levels at the end of 2025 as tax cuts passed by Republicans in 2017 expire. Biden's expected Republican opponent, former President Donald Trump, has said he wants to preserve those tax cuts that he signed into law - a move that would add to deficits unless savings are found elsewhere. SPENDING CAPS, IMMIGRATION The slower pace in the CBO's 30-year debt and deficit growth projections partly reflects Congress' passing of two measures limiting the spending increase on discretionary programs, including defense and government agency budgets. Moreover, the CBO estimated higher economic growth, particularly in the first decade of the forecast period, fueled by stronger net immigration. The CBO now projects 2.1% real GDP growth in the 2024-2033 period, compared to 1.8% in the June forecasts. "That increase reflects faster projected growth in the potential labor force that is largely attributable to significant upward revisions to the agency's projections of net immigration over the next decade, particularly through 2027," the CBO said. Although it projected that the labor force participation rate will fall, it estimated that the prime working age population aged 25-54 will be about 3% higher in 2053 than in the June projections. Over the 2034-2053 period, CBO projected that U.S. real potential growth will average 1.6% compared to 1.5% in the prior forecasts, reflecting greater capital accumulation. But deficit headwinds are expected from rising interest costs due to higher rates and a larger debt pile. The CBO forecast net interest costs will reach 6.3% of GDP in fiscal 2054, more than double the 3.1% estimate for 2024. At that rate, in 30 years, interest costs would exceed Social Security outlays of 5.9% of GDP and discretionary spending of 4.9%, including defense. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/cbo-says-us-30-year-deficits-grow-slower-pace-due-spending-caps-stronger-gdp-2024-03-20/