Micron Technology (MU) stock fell more than 5% out of the gate Thursday as the memory chipmaker's disappointing fiscal fourth-quarter revenue outlook overshadows its fiscal third-quarter top- and bottom-line beats.
In the quarter ended May 30, Micron's revenue surged 81.5% year-over-year to $6.8 billion, driven by "robust AI-driven demand for data center products." Its earnings per share (EPS) came in at 62 cents compared with a loss of $1.43 in the year-ago period.
"We are gaining share in high-margin products like High Bandwidth Memory (HBM), and our data center solid-state-drives (SSD) revenue hit a record high, demonstrating the strength of our AI product portfolio across DRAM and NAND," Micron CEO Sanjay Mehrotra said in a statement.
The results handily beat analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $6.7 billion and earnings of 51 cents per share.
However, sentiment turned negative toward Micron after the company provided the outlook for its fiscal fourth quarter, which didn't blow away analysts' expectations. MU anticipates revenue of approximately $7.6 billion, plus or minus $200 million, and EPS of roughly $1.08, give or take 8 cents per share. Analysts are expecting revenue of $7.6 billion and earnings of $1.05 per share.
Still, Mehrotra says the company is excited "about the expanding AI-driven opportunities ahead, and are well positioned to deliver a substantial revenue record in fiscal 2025."
Is Micron stock a buy, sell or hold?
Wall Street is very bullish on the tech stock and for good reason. Indeed, MU has been one of the best semiconductor stocks so far this year, up 58% even with today's decline. According to S&P Global Market Intelligence, the average analyst target price for MU stock is $157.23, representing implied upside of more than 16% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Financial service firm Stifel is one of the more bullish outfits on Micron stock with a Buy rating and $165 price target.
"Though Micron's earnings and quarterly outlook exceeded consensus, expectations were clearly elevated ahead of Wednesday’s print, causing the stock to trade-off in the aftermarket," Stifel said in a note this morning. "Ultimately, we see the benefits to pricing and profitability in the interim outweighing other concerns and maintain our Buy rating."
Stifel's $165 price target represents implied upside of nearly 22% to current levels.
