Micron Technology shares tumbled in early Thursday trading after the memory chip maker's muted near-term outlook clouded an otherwise solid quarterly earnings report and triggered a host of price target changes from Wall Street analysts.
Micron (MU) shares have lost nearly a third of their value, or around $55 billion, since they touched a record high in mid-June as investors worried that a slump in demand for consumer electronics would blunt profit and revenue from its key DRAM memory division.
The group acknowledged that demand weakness in last night's fiscal-first-quarter earnings report but noted that the overstocked market would likely unwind early next year.
In the meantime, sales of its key high-bandwidth memory chips, a crucial component in artificial-intelligence technologies, continue to grow, helping it top Wall Street's quarterly revenue forecast and post a better-than-expected bottom line of $1.79 a share.
Those chips, including a new HBM3E iteration, are now being built into Nvidia's (NVDA) H200 processors, as well as its newly developed Blackwell systems. The chips have established Micron as one of just a few global companies that can compete in this fast-growing market.
Micron Technology/TheStreet
Micron CEO Sanjay Mehrotra in fact said the total addressable market for HBM chips would likely rise to around $30 billion next year and top $100 billion by 2030.
"Our TAM forecast for HBM in 2030 would be bigger than the size of the entire DRAM industry, including HBM, in calendar 2024," Mehrotra told investors on a conference call late Wednesday.
"This HBM growth will be transformational for Micron, and we are excited about our industry leadership in this important product category."
Solid HBM revenue outlook at Micron
Still, Micron forecast current-quarter revenue in the region of $7.9 billion, with a $200 million margin for error. The figure missed Wall Street estimates by at least $1 billion and sent its shares sharply lower in after-hours trading.
"Following the post-Powell bloodbath at the close Wednesday, shares clearly appear to be heading lower, with AI leverage unlikely to offer support near term," said Cantor Fitzgerald analyst C.J. Muse.
"This said, we do view this as simply a pause led by the more cyclical areas of the business with the more secular AI levers still well in play," he added. "Thus, we reiterate our overweight rating and continue to expect shares to outperform in 2025."
Related: Top analyst revisits Micron stock price target ahead of Q1 earnings
JP Morgan analyst Harlan Sur was also bullish about Micron's near-term opportunity but nonetheless lowered his price target by $35 to $145 a share following last night's update.
"Despite near-term weakness, we believe the memory down-cycle will be short-lived and expect market conditions to improve in the latter part of 2025, driven by tight leading-edge DRAM supply and strong AI server demand, which will drive growth in HBM and DDR5 [Micron's latest iteration]," he said.
Is Micron stock slump overdone?
"We maintain a positive view on the stock in first-half 2025 as the market starts to discount a recovery in revenue, pricing, and gross margins in second-half 2025," Sur added.
Bernstein analyst Mark Li, who carries a $120 price target and outperform rating on Micron, agreed that the stock's after-hours slump "seems overdone," given its HBM outlook of “multiple billion" in current year sales.
"Micron's [fiscal-second-quarter] guidance was a big miss, mainly due to a temporary slowdown in [enterprise solid state drives], though DRAM remains relatively solid," said Li.
"On HBM, Micron increased its total addressable market estimate and outlined a growth pathway through 2030," he added. "HBM progressed ahead of expectations, with revenue more than doubling quarter-over-quarter in fiscal Q1 and margins significantly accretive relative to DRAM."
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Goldman Sachs analyst Toshiya Hari lowered both his profit and revenue estimates for Micron for the next two years following last night's update, but reiterated his 'buy' rating on the back of Micron's position in the HBM demand story.
The analyst also lowered his price target on the group by $17 to $128 per share.
Other price target changes include Mizuho analyst Vijay Rakesh, who lowered his by $20 to $115 per share, as well as Stifel analyst Brian Chin, who clipped his by $5 to $130.
Micron shares were marked 16.7% lower in early Thursday trading, a move that would be its biggest single-day decline in four years, to change hands at $86.88 each.
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