Micron Technology Shares Plummet

(Reuters) – Micron Technology (NASDAQ:MU) shares plummeted 15% in premarket trading on Thursday after a dismal forecast, highlighting weak demand for personal computers and smartphones. This overshadowed a solid lift from sales of AI-related chips.

DRAM Market Pressure

The dynamic random-access memory (DRAM) chips, which represent the company's largest revenue source, have faced pressure since the pandemic's end amid a lingering supply glut. Morgan Stanley (NYSE:MS) analysts noted that the DRAM market is deteriorating, especially in older technologies, which typically indicates an oversupply.

Future Projections

Micron anticipates low-single-digit percentage growth for smartphones in 2025. Global PC shipments dipped 1.3% in the third quarter, totaling 62.9 million units, according to Gartner (NYSE:IT).

HBM Chip Revenue Growth

In contrast, revenue from Micron's high-bandwidth memory (HBM) chips, crucial for advanced AI systems, doubled sequentially. Piper Sandler analysts stated, "Micron's HBM story remains intact as the company is poised to capitalize on data center investments in 2025."

The Boise, Idaho-based company is one of three HBM chip providers, alongside SK Hynix and Samsung (KS:005930). Demand for HBM chips has boosted Micron's stock by about 22% this year, with analysts believing it will continue to be a key driver.

Price Target Adjustments

Following the results, at least six brokerages cut their price targets on the stock, per LSEG. Micron's 12-month forward price-to-earnings ratio stands at 10.67, lower than Qualcomm (NASDAQ:QCOM)'s 13.4 and Advanced Micro Devices (NASDAQ:AMD)'s 23.97.