In This Article:
Updated at 9:56 AM EST
Micron Technology shares tumbled in early Thursday trading after the memory chip maker's muted near-term outlook clouded an otherwise solid quarterly earnings report and triggered a host of price target changes from Wall Street analysts.
Micron (MU) shares have lost nearly a third of their value, or around $55 billion, since they touched a record high in mid-June as investors worried that a slump in demand for consumer electronics would blunt profit and revenue from its key DRAM memory division.
The group acknowledged that demand weakness in last night's fiscal-first-quarter earnings report but noted that the overstocked market would likely unwind early next year.
In the meantime, sales of its key high-bandwidth memory chips, a crucial component in artificial-intelligence technologies, continue to grow, helping it top Wall Street's quarterly revenue forecast and post a better-than-expected bottom line of $1.79 a share.
Those chips, including a new HBM3E iteration, are now being built into Nvidia's (NVDA) H200 processors, as well as its newly developed Blackwell systems. The chips have established Micron as one of just a few global companies that can compete in this fast-growing market.
Micron CEO Sanjay Mehrotra in fact said the total addressable market for HBM chips would likely rise to around $30 billion next year and top $100 billion by 2030.
"Our TAM forecast for HBM in 2030 would be bigger than the size of the entire DRAM industry, including HBM, in calendar 2024," Mehrotra told investors on a conference call late Wednesday.
"This HBM growth will be transformational for Micron, and we are excited about our industry leadership in this important product category."
Solid HBM revenue outlook at Micron
Still, Micron forecast current-quarter revenue in the region of $7.9 billion, with a $200 million margin for error. The figure missed Wall Street estimates by at least $1 billion and sent its shares sharply lower in after-hours trading.
"Following the post-Powell bloodbath at the close Wednesday, shares clearly appear to be heading lower, with AI leverage unlikely to offer support near term," said Cantor Fitzgerald analyst C.J. Muse.
"This said, we do view this as simply a pause led by the more cyclical areas of the business with the more secular AI levers still well in play," he added. "Thus, we reiterate our overweight rating and continue to expect shares to outperform in 2025."
Related: Top analyst revisits Micron stock price target ahead of Q1 earnings
JP Morgan analyst Harlan Sur was also bullish about Micron's near-term opportunity but nonetheless lowered his price target by $35 to $145 a share following last night's update.