Key Points:
- Micron’s fourth-quarter revenue forecast of $7.6 billion did not meet higher investor expectations.
- Shares fell 5% despite more than doubling over the past year and a 14% increase this month.
- Investors anticipated extraordinary results due to the AI boom and Micron’s position in the HBM market.
- Some analysts remain positive about Micron’s market, seeing the stock pullback as a buying opportunity.
Micron Technology (MU.O) experienced a 5% drop in early trading on Thursday after its quarterly revenue forecast failed to meet the lofty expectations driven by the AI boom. Despite being a significant provider of high-bandwidth memory (HBM) chips essential for advanced AI systems, Micron’s forecast did not satisfy investors looking for extraordinary results.
The company announced that it had “sold out” its HBM chips for this year and the next, initially driving up investor expectations. Micron’s shares have more than doubled over the past year, including a 14% increase this month alone, leading to the results released on Wednesday.
For the fourth quarter, Micron forecasted revenue to rise about 90% to $7.6 billion, plus or minus $200 million. This projection was in line with the average analyst estimate but fell short of at least one higher estimate of $8.11 billion, according to LSEG. “Anything less than fantastic is not good enough when your share price has tripled in about 18 months,” noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The market reaction highlights the high expectations for companies within the AI ecosystem. Despite the disappointment, some analysts remained optimistic about Micron’s market position, particularly after exceeding third-quarter revenue estimates.
Goldman Sachs analysts saw the stock’s pullback as a buying opportunity, citing potential market share gains in the lucrative HBM market. Piper Sandler’s Harsh Kumar shared this sentiment, noting that end markets for Micron are improving, with increasing demand and tight supply conditions likely to persist through 2025.
Several brokerages raised their price targets for Micron following the results. According to LSEG data, the company has a 12-month forward price-to-earnings ratio of 17.07, which compares favorably to Nvidia’s (NVDA.O) 40.22 and the industry median of 23.46.
