Micron Technology, a leading chipmaker, saw its shares drop 8% on Friday after the company announced a tepid margin forecast that overshadowed robust quarterly revenue growth. The move comes as investors had bet on improving consumer memory chip pricing and benefiting from Micron’s position in AI supply chains.
A lower-than-expected adjusted gross margin forecast of about 36.5% for the third quarter, missing analysts’ average estimate of 36.9%, took a toll on shares. The company cited a challenging industry environment in NAND (a type of memory chip) as the reason for the drop, citing underutilization of production and fixed costs spreading across smaller output.
However, Micron’s forecast did beat expectations in terms of revenue growth, driven by strong demand for its high-bandwidth memory chips used in artificial intelligence tasks. The company has been ramping up production to meet this growing demand from GPU market leaders like Nvidia, further pressuring margins.
Analysts remain optimistic about the outlook, with Morningstar predicting continued AI and data center demand for Micron’s products. Despite the mixed results, shares have gained more than 13% so far in 2024, driven by hopes for improved consumer memory chip pricing.
Source: https://www.reuters.com/technology/chipmaker-microns-shares-slump-tepid-margin-forecast-eclipses-ai-prospects-2025-03-21