Shares of Micron Technology (MU, Financial) tanked 5% in the extended session Wednesday following the company's quarterly revenue and profit forecast below Wall Street estimates. The chipmaker's dramatic miss was blamed on sluggish consumer-centric product demand for personal computers and smartphones and a supply glut in the dynamic random-access memory (DRAM) market, which provides most of its revenue.
Sanjay Mehrotra, CEO, stated on an investor call that modest growth in smartphone shipments is anticipated in fiscal 2025, with improvements in the second half. However, PCs and other consumer products demand is weak, putting pressure on earnings. Gartner reported that global PC shipments declined 1.3% year over year to 62.9 million units in the third quarter of 2024.
For its part, Micron, also in line with estimates, reported first-quarter revenue of $8.71 billion, up 84% year over year on a consolidated basis. Demand for high-bandwidth memory (HBM) chips, critical to artificial intelligence, has jumped sequentially, while the company's traditional markets like PCs, smartphones, and the automotive sectors still dull its outlook.
Analysts said that a $1 billion revenue shortfall stood out as a critical market concern. "But while the AI data centre portion of the business has continued to be robust, sales in consumer markets came in slower than anticipated, catching the market by surprise," said Bob O'Donnell, president of TECHnalysis Research.
The three global HBM chip suppliers are ramping up their production in the hope of profiting from AI-driven opportunities.
