Micron Technology Forecast Quarterly Revenue and Profit Below Estimates, Shares Plummet
Micron Technology, a leading chipmaker, forecast quarterly revenue and profit below Wall Street estimates on Wednesday, sending shares tumbling. The company attributed the weak demand to sluggish consumer demand and a supply glut in the market for dynamic random-access memory (DRAM) chips, which account for most of its revenue.
The company’s CEO, Sanjay Mehrotra, noted that demand for smartphones has remained weak and shipments are likely to increase in the second half of the company’s fiscal year ending August 2025. Despite this, Micron expects low-single-digit percentage growth for smartphones in 2025, consistent with its prior expectations.
The market’s negative reaction to Micron’s forecast was also driven by the company’s failure to meet revenue projections by $1 billion and weak demand in traditional markets such as PCs, autos, and industrial markets. The company’s stock fell 15% in extended trading, following a decline of over 30% from its record highs in June.
Micron’s revenue from high-bandwidth memory (HBM) chips, a type of DRAMs, has experienced strong demand due to their use in artificial intelligence. The company is now focusing on increasing its production of HBM chips, which has become a key driver for the company.
Excluding certain items, Micron expects to earn $1.43 per share, plus or minus 10 cents, for the second quarter, below analysts’ expectation of $1.91. The company also expects to report second-quarter revenue of $7.90 billion, plus or minus $200 million, below analysts’ estimate of $8.98 billion.