Micron Technology shares dropped about 15% on Thursday, as the company’s bleak forecast highlighted sluggish demand for personal computers and smartphones. Despite robust growth in sales of AI-related chips, the market for dynamic random-access memory (DRAM) chips used in PCs and smartphones remains under pressure due to a lingering supply glut and weak consumer demand.
The expected revenue from Micron’s flash memory chip business in fiscal 2025 is significantly weaker than anticipated, with sales exposed to PC and mobile phone shipments. The post-pandemic growth in traditional PC demand did not meet expectations, and AI-enabled computers are yet to gain widespread popularity.
The transition to Windows 11 has also been more gradual than predicted, further weighing on the company’s prospects. Micron’s market value is set to fall by over $17 billion, taking it down to around $99 billion, if losses hold.
However, revenue from high-bandwidth memory chips, a type of DRAM chip used for powering advanced AI systems, more than doubled sequentially. Analysts say this area remains a key driver for the company’s stock, with demand for HBM chips helping boost its value by about 22% so far this year.
At least 10 brokerages have cut their price targets on Micron’s stock following the results, and the company’s 12-month forward price-to-earnings ratio stands at 10.67, lower than peers Qualcomm and Advanced Micro Devices.
Source: https://finance.yahoo.com/news/micron-slumps-bleak-quarterly-forecast-112219540.html