Kanchana Chakravarty
(Reuters) – Micron shares fell 5% in early trading on Thursday after the memory chip maker’s quarterly revenue forecast failed to impress investors expecting outsized results driven by the artificial intelligence boom.
The company, one of the few suppliers of high-bandwidth memory (HBM) chips used in advanced artificial intelligence systems, said it was “sold out” of those chips for this year and next, raising expectations.
Micron (NASDAQ:) shares have more than doubled over the past year, including a roughly 14% gain this month ahead of Wednesday’s results.
The company forecast fourth-quarter revenue to rise about 90% to $7.6 billion, give or take $200 million, in line with analysts’ average estimate. At least one estimate put it at $8.11 billion, according to LSEG.
“Anything less than fantasy is not enough when your share price has tripled in just 18 months,” Ipek Ozkardesskaya, senior analyst at Swissquote Bank, said in a note.
The chipmaker will lose $8.3 billion at the current level of $134.8.
“The market reaction underscores the high expectations of every company that is part of the artificial intelligence ecosystem,” Saxo Bank analysts said.
Some analysts, however, were positive on the company’s markets after the company beat revenue estimates in the third quarter.
Analysts at Goldman Sachs see the stock’s pullback “as an opportunity to add to positions” as the brokerage continues to see Micron’s market share rise in the lucrative HBM market.
Piper Sandler’s Harsh Kumar had a similar point of view. “At a high level, end markets for MU continue to improve as demand increases and supply is still relatively constrained.”
“We expect these conditions to persist through at least most of 2025,” Kumar added.
At least five brokerages raised their price targets following the results.
Micron has a 12-month forward price-to-earnings ratio of 17.07, compared to AI darling Nvidia (NASDAQ:)’s 40.22 and industry median of 23.46, according to LSEG.