Shares of Micron technology plunged in early trading Thursday after the memory chip maker's weak near-term outlook clouded an otherwise strong quarterly earnings report and prompted a series of price target changes by part of Wall Street analysts.
Micron (IN) The stock has lost nearly a third of its value, or about $55 billion, since hitting a record high in mid-June, as investors feared a drop in demand for consumer electronics would hurt profits and revenue from its key DRAM memory division.
The group acknowledged the weakness in demand in last night's fiscal first-quarter earnings report, but noted that the overstocked market would likely ease early next year.
Meanwhile, sales of its key high-bandwidth memory chips, a crucial component in artificial intelligence technologies, continue to grow, helping it beat Wall Street's quarterly revenue forecast and post a better bottom line. than expected of $1.79 per share.
Those chips, including a new HBM3E version, are now being integrated into Nvidia's processor. (NVDA) H200 processors, as well as their newly developed Blackwell systems. The chips have made Micron one of the few global companies that can compete in this fast-growing market.
Micron/TheStreet technology
In fact, Micron CEO Sanjay Mehrotra said the total addressable market for HBM chips will likely rise to around $30 billion next year and surpass $100 billion by 2030.
“Our TAM forecast for HBM in 2030 would be larger than the size of the entire DRAM industry, including HBM, in calendar 2024,” Mehrotra told investors on a conference call late Wednesday.
“This growth for HBM will be transformative for Micron and we are excited about our industry leadership in this important product category.”
Strong revenue prospects for HBM at Micron
Still, Micron forecast revenue for the current quarter in the region of $7.9 billion, with a margin of error of $200 million. The figure missed Wall Street estimates by at least $1 billion and sent its shares tumbling sharply in after-hours trading.
“Following the post-Powell bloodbath at Wednesday's close, stocks clearly appear to be heading lower, and ai leverage is unlikely to offer support in the near term,” said Cantor Fitzgerald analyst CJ Muse .
“That said, we see it as simply a pause led by the more cyclical areas of the business with the more secular levers of ai still in play,” he added. “Therefore, we reiterate our Overweight rating and continue to expect the stock to outperform in 2025.”
Related: Top Analyst Revises Micron Stock Price Target Ahead of Q1 Earnings
JP Morgan analyst Harlan Sur was also bullish on Micron's near-term opportunity, but still lowered his price target by $35 to $145 per share after last night's update.
“Despite near-term weakness, we believe the memory downturn cycle will be short-lived and expect market conditions to improve in the latter part of 2025, driven by tight supply of edge DRAM and strong demand for ai servers, which will drive growth in HBM and DDR5 (Micron's latest version),” he said.
Is Micron's Stock Drop Overblown?
“We maintain a positive view on the stock in the first half of 2025, as the market begins to price in a recovery in revenues, prices and gross margins in the second half of 2025,” Sur added.
Bernstein analyst Mark Li, who has a $120 price target and an outperform rating on Micron, agreed that the stock's after-hours drop “seems overdone,” given HBM's outlook of ” “multiple billions” in sales for the current year.
“Micron's guidance (for the fiscal second quarter) was a big miss, mainly due to a temporary slowdown (in enterprise solid-state drives), although DRAM remains relatively strong,” Li said.
“At HBM, Micron increased its total addressable market estimate and outlined a growth path to 2030,” he added. “HBM advanced above expectations: revenue more than doubled from the fiscal first quarter and margins increased significantly relative to DRAM.”
More ai actions:
- Top Analyst Revises Micron Stock Price Target Ahead of Q1 Earnings
- Analysts renew Ciena stock price target after ai outlook
- Cathie Wood Buys $30 Million in Under-the-radar ai stocks
Goldman Sachs analyst Toshiya Hari lowered his earnings and revenue estimates for Micron for the next two years after last night's update. It affirmed its buy rating thanks to Micron's position in the HBM lawsuit story.
The analyst also reduced his price target for the group by $17, to $128 per share.
Other price target changes include Mizuho analyst Vijay Rakesh cutting his price by $20 to $115 per share, as well as Stifel analyst Brian Chin cutting it by $5 to $130.
Micron shares fell 12% in premarket trading, a move that would be their biggest single-day drop in four years, to indicate an opening price of $91.39 each.
Related: Veteran Fund Manager Offers Alarming Forecast for S&P 500
