Micron's weak outlook sparks a big skid for the AI stock

Dow Jones12-19 05:18

MW Micron's weak outlook sparks a big skid for the AI stock

By Emily Bary

The memory-chip company cites weakness in consumer-facing markets but momentum in higher-margin areas and those levered to AI

Micron Technology Inc. badly missed with its outlook for the latest quarter, which could stoke fears about near-term pricing dynamics in the memory market.

For the fiscal second quarter, Micron $(MU)$ projected $7.90 billion in revenue at the midpoint, with $200 million in variability on each end. The FactSet consensus called for $8.94 billion.

Shares were sliding 11% in Wednesday's extended session.

The company posted $8.71 billion in overall revenue for the fiscal first quarter, matching what analysts tracked by FactSet were modeling.

Micron's earnings report has been highly anticipated within the chip sector given big moves in chip stocks recently in light of Broadcom Inc.'s $(AVGO)$ strong outlook. That was one factor that had investors again digging beyond Nvidia Corp. $(NVDA)$ for semiconductor-sector beneficiaries of artificial-intelligence spending.

Some analysts saw the possibility that near-term pricing dynamics would weigh on Micron's results and outlook. Key will be Micron's discussion of the potential for its high-bandwidth-memory business, which is useful for AI.

"While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year," Chief Executive Sanjay Mehrotra said in a release. "We continue to gain share in the highest-margin and strategically important parts of the market and are exceptionally well-positioned to leverage AI-driven growth to create substantial value for all stakeholders."

Micron saw data-center revenue make up more than half of total revenue for the first time in the latest quarter.

-Emily Bary

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December 18, 2024 16:18 ET (21:18 GMT)

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Micron's weak outlook sparks a big skid for the AI stock

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