Market Shift: Micron Technology’s Shares Plummet Amid Sluggish Demand
The technology sector was abuzz on Thursday as Micron Technology’s shares took a drastic hit, plummeting by approximately 12% in premarket trading. The primary culprit behind this downturn was the company’s bleak forecast, which highlighted a lackluster demand for personal computers and smartphones.
The DRAM Chip Conundrum
The market for dynamic random-access memory (DRAM) chips, a crucial component in personal computers and smartphones, has been under immense pressure since the pandemic. A lingering supply glut, coupled with sluggish consumer demand, has created a perfect storm for DRAM chip manufacturers. According to Morningstar analyst William Kerwin, Micron’s flash memory chip revenue in fiscal 2025 is expected to take a significant hit, primarily due to its exposure to PC and mobile phone shipments.
The AI-Driven Silver Lining
However, not all was doom and gloom for Micron. The company’s revenue from high-bandwidth memory chips, a type of DRAM chip used to power advanced AI systems, more than doubled sequentially. This surge in demand has been a key driver for Micron’s stock, which has risen by approximately 22% so far this year. Piper Sandler analysts noted that Micron’s high-bandwidth memory (HBM) story remains intact, with the company well-positioned to capitalize on market expansion opportunities from data center investments in 2025.
Industry Woes
The technology sector has been grappling with several challenges, including the post-pandemic growth in demand for traditional PCs failing to meet expectations. Moreover, the expected transition to Windows 11 following Microsoft’s decision to end support for Windows 10 has been more gradual than predicted. These factors have contributed to Micron’s market value taking a hit, with the company set to lose over $14 billion in value if premarket losses hold.
Analysts Weigh In
Following Micron’s results, at least 10 brokerages cut their price targets on the stock. Despite this, Micron’s 12-month forward price-to-earnings ratio remains relatively low at 10.67, compared to Qualcomm’s 13.4 and Advanced Micro Devices’ 23.97. As the technology sector continues to evolve, it remains to be seen how Micron will navigate these challenges and capitalize on emerging opportunities.
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