Micron Technology’s stock took a significant hit, plummeting around 15% on Thursday following a discouraging forecast that highlighted subdued demand for personal computers and smartphones, overshadowing any positive impact from the strong growth in sales of AI-related chips. The market for dynamic random-access memory (DRAM) chips, which are commonly used in personal computers and smartphones, has continued to face challenges post-pandemic due to a persistent oversupply and lackluster consumer demand. Analysts, such as Morningstar’s William Kerwin, anticipate a notable decline in Micron’s flash memory chip revenue for fiscal 2025, particularly as these chips are more closely tied to PC and mobile phone shipments.
Despite expectations for increased demand for traditional PCs in the wake of the pandemic, growth in this sector fell short, while AI-enabled computers have not yet achieved widespread popularity. Additionally, the anticipated shift to Windows 11 subsequent to Microsoft’s announcement of ending support for Windows 10 has been slower than initially predicted, adding further pressure to the industry. Micron’s market value is poised to decrease by over $17 billion, settling at around $99 billion if the losses persist.
On a more positive note, revenue from the company’s high-bandwidth memory (HBM) chips, a type of DRAM chip crucial for powering advanced AI systems, saw a significant increase, more than doubling sequentially. Analysts at Piper Sandler remain optimistic about Micron’s HBM segment, citing the company’s strategic positioning to capitalize on market expansion opportunities driven by data center investments in 2025. Micron, headquartered in Boise, Idaho, stands as one of the three major providers of HBM chips, alongside South Korea’s SK Hynix and Samsung. The growing demand for HBM chips has played a key role in boosting Micron’s stock by approximately 22% year-to-date, and analysts foresee it continuing to be a significant growth driver.
Following the release of these results, at least 10 brokerage firms revised their price targets for Micron’s stock, as indicated by data compiled by LSEG. Micron’s 12-month forward price-to-earnings ratio stands at 10.67, lower than that of Qualcomm at 13.4 and Advanced Micro Devices at 23.97. Despite the challenges faced by the company in certain segments, the positive performance of its HBM chips and the strategic positioning within the AI market provide a glimmer of hope for continued growth and resilience.
This report was contributed by Akash Sriram and Joel Jose in Bengaluru, with editing by Sriraj Kalluvila and Krishna Chandra Eluri.
