Chipmaker Micron’s Shares Plummet 16% After Disappointing Earnings Report
A Sudden Downturn
Micron’s stock took a drastic hit on Thursday, plummeting 16% to its lowest point since the start of the Covid pandemic in March 2020. The chipmaker’s disappointing second-quarter guidance in its earnings report sent shockwaves through the market, causing its stock to fall to $86.78 in early afternoon trading.
A Far Cry from Its All-Time High
This significant decline marks a 45% drop from Micron’s all-time high in June, leaving investors reeling. The company’s revenue expectations for the fiscal second quarter fell short of analyst predictions, with Micron forecasting $7.9 billion, plus or minus $200 million, and adjusted earnings per share of $1.43, plus or minus 10 cents.
Analysts’ Expectations Shattered
In contrast, analysts had anticipated revenue of $8.98 billion and EPS of $1.91, according to LSEG. The disparity between Micron’s forecast and analyst expectations has raised concerns about the company’s growth prospects.
CEO Sanjay Mehrotra Weighs In
On the earnings call, CEO Sanjay Mehrotra attributed the slowdown to weaker growth in consumer devices and “inventory adjustments.” He also cited delays in the PC refresh cycle and elevated customer inventory in smartphones.
A Mixed Bag
Despite the disappointing guidance, Micron reported an earnings beat for the first quarter, with EPS coming in at $1.79, surpassing the $1.75 average analyst estimate. Revenue jumped 84% from a year earlier to $8.71 billion, meeting estimates. The growth was driven by a 400% increase in data center revenue, largely due to demand for artificial intelligence.
A Glimmer of Hope
Micron remains optimistic about its future prospects, citing its strong position in the market and its ability to leverage AI-driven growth to create value for stakeholders. However, the company’s recent performance has left investors wondering if it can regain its momentum.
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