Memory-chip maker Micron Technology (MU) isn’t out of the woods amid a cyclical industry downturn. MU stock fell early Thursday after Micron reported fiscal fourth-quarter profit and revenue that topped estimates while guidance came in mixed.
The memory chip maker reported August quarter earnings after the market close on Wednesday. Micron earnings for the quarter ending Aug. 31 fell 26% from a year earlier while revenue tumbled 40%. Results topped views amid lowered expectations.
The Boise, Idaho-based company said it lost an adjusted $1.07 per share on sales of $$4.01 billion for the quarter. Analysts polled by FactSet had expected Micron to lose $1.15 a share on sales of $3.945 billion. In the year-earlier period, Micron earned $1.45 a share on sales of $6.44 billion.
MU Stock: Outlook Mixed
For the current quarter ending in November, Micron predicted an adjusted loss of $1.07 per share, the same as in the August quarter, on revenue of $4.4 billion. Wall Street analysts had projected a loss of 88 cents a share on sales of $4.24 billion, up 4% from a year earlier.
“Pricing is starting to inflect as aggressive production cuts across the industry are helping improve demand supply balance,” said Raymond James analyst Srini Pajjuri in a report. He added: “We believe the combination of muted supply growth, normalizing inventories, and stable demand will set the stage for multi-quarter cyclical upturn starting in the fourth quarter of calendar 2023.”
On the stock market today, MU stock dropped nearly 4% to 65.50 in early trading. Heading into the Micron earnings report, MU stock had advanced 36% in 2023 amid buzz around artificial intelligence stocks.
“Our 2023 performance positions us well as a market recovery takes shape in 2024, driven by increasing demand and disciplined supply,” Chief Executive Sanjay Mehrotra said in the earnings release. “We look forward to record industry (total addressable market) revenue in 2025 as (artificial intelligence) proliferates from the data center to the edge.”
Micron makes two main types of memory chips: dynamic random-access memory, or DRAM, and Nand. DRAM chips act as the main memory in PCs, servers and other devices. Nand flash retains memory when power is turned off and provides longer-term data storage.
Analysts expect memory chip pricing to firm up in fiscal 2024. But the Chinese government plans to ban Micron memory chips from its computer network infrastructure.
Long-term, artificial intelligence workloads could increase demand for Nand chips built into hard disk drives in data centers.
MU stock holds a IBD Composite Rating of 66 out of a best-possible 99, according to IBD Stock Check-up.
IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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