(Reuters) -Micron Technology forecast third-quarter revenue and posted second-quarter revenue above Wall Street estimates on Thursday, signaling strong demand for its high-bandwidth memory (HBM) chips used by the AI industry.

The company’s shares rose nearly 5% in after-hours trading, following a 9% increase earlier this month on investor optimism that Micron would benefit from artificial intelligence-driven demand.

The surge in demand for AI has significantly boosted the need for Micron’s HBM chips, a type of dynamic random access memory or DRAM standard essential for advanced AI systems, designed to save space and reduce power consumption.

Micron also offers flash memory NAND chips, serving the data storage market.

“We expect record quarterly revenue in fiscal Q3, with DRAM and NAND demand growth in both data center and consumer-oriented markets,” said CEO Sanjay Mehrotra. The company also expects significantly improved profitability in fiscal year 2025.

Impacts from potential new tariffs imposed by U.S. President Donald Trump are not included in the forecast, “given the uncertainty around tariff timing, nature and implementation,” Micron said.

The company is seeing inventory reductions at its PC and smartphone customers and expects a return to healthy levels by spring, following a buildup in anticipation of higher prices.

The company said it expects revenue of $8.80 billion, plus or minus $200 million for the quarter, compared with an estimate of $8.5 billion, according to data compiled by LSEG.

Revenue for the second quarter ending February 27 came in at $8.05 billion, beating the estimate of $7.89 billion.

(Reporting by Juby Babu in Mexico City; Editing by Vijay Kishore)