Micron Technology's Revenue Forecast

(Reuters) – Micron Technology forecast second-quarter revenue and profit below Wall Street estimates on Wednesday, as weakened prices of memory chips used in handsets and PCs weigh on earnings, sending its shares down 13.6% in extended trading.

Micron (NASDAQ:MU)'s stock has fallen more than 30% from the record high it hit in June, weighed down by disappointing consumer demand.

DRAM Chip Market Conditions

The market for DRAM chips, which account for most of Boise, Idaho-based Micron's revenue, remains sluggish due to weak consumer demand and an ongoing supply glut. DRAM chips are utilized in data centers, personal computers, smartphones, and various computing devices.

According to research firm Gartner (NYSE:IT), global PC shipments stood at 62.9 million units in the third quarter of calendar year 2024, reflecting a 1.3% decline from the previous year.

CEO Comments

CEO Sanjay Mehrotra commented, "The PC refresh cycle is unfolding more gradually, and we expect PC unit volume growth to be flattish in calendar 2024, slightly below prior expectations." He added, "We remain optimistic about AI PC adoption over time."

Earnings Expectations

Excluding items, Micron expects to earn $1.43 per share, plus or minus 10 cents, in the second quarter, which is lower than analysts' expectation of $1.91, according to data compiled by LSEG.

The company anticipates reporting second-quarter revenue of $7.90 billion, plus or minus $200 million, compared to analysts' estimate of $8.98 billion.

Demand Challenges

Demand for PCs and smartphones in key markets, particularly China, remains weak, resulting in reduced inventory levels and an oversupply of memory chips.

Micron is in the process of developing a 1,400-acre mega campus in central New York state for DRAM chip production. It also offers flash memory NAND chips, serving the data storage market.