- Q2 guidance very weak versus consensus
- Micron stock plunges 15% after-hours
- Analysts say HBM story ‘remains intact’
Missing forecasts seldom goes down well with investors and soggy guidance is usually equally unsavoury to markets, so it comes as little surprise that Micron Technology’s (MU:NASDAQ) soft outlook sparked a hefty stock reaction.
Shares in the memory chipmaker plunged 15% overnight after steering second quarter 2025 earnings and revenue guidance way below existing consensus. The company forecast adjusted earnings of $1.33 to $1.53 per share, compared to analysts’ consensus estimate of $1.97, a 22% to 32% miss.
Revenue guidance was no better, with Q2 expected to be $7.90 billion, give or take $200 million, significantly short of the $8.97 billion estimated by analysts.
BEHIND THE NUMBERS
Crucially, Micron’s emerging AI angle, it’s HBM chips or high bandwidth memory chips, ‘remains intact’, said analyst at Piper Sandler.
‘Comments on the call indicated HBM shipments were ahead of plans in the quarter and Micron expects to recognize several billions of dollars from HBM in 2025’, Piper Sandler said, with Micron seen capitalising on datacentre market expansion through 2025.
Micron, a big Nvidia (NVDA:NASDAQ) supplier, has problems with weaker demand in mature markets for home PCs, laptops, and smartphones, which peaked a few years ago. ‘While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year’, said Micro CEO Sanjay Mehrotra.
These end markets have been drifting lower or flat for a while and any hopes of a rebound in 2025 might depend on how quickly tech kit manufacturers can get AI-powered products into shops.
Micron shares are seen opening at $88.45 later today, based on pre-market data, having started 2024 at $82.
