Micron is bracing for its biggest decline since 2020 due to sluggish sales expectations

(Bloomberg) — Micron Technology, the largest U.S. maker of computer memory chips, is bracing for its biggest stock decline in more than four years after its revenue forecast beat expectations, hurt by slowing demand for smartphones and personal computers.

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The company said in a statement on Wednesday that sales will reach about $7.9 billion in the second fiscal quarter, which continues through February. This compares to analysts’ average estimate of $8.99 billion. Profit would be no more than $1.53 per share, minus certain items, well below expectations of $1.92.

Although Micron is seeing strong demands for components used in AI computing, it still faces weak demand from phone and PC makers — the two markets that consume the majority of its chip volume.

Micron shares, which were up 22% this year through Wednesday’s close, fell 15% in premarket trading before the New York stock exchanges opened on Thursday. If the decline continues, it will be the largest intraday decline since March 2020.

“While consumer-oriented markets are weaker in the near term, we expect a return to growth in the second half of our fiscal year,” CEO Sanjay Mehrotra said in the statement.

In the fiscal first quarter, which ended Nov. 28, sales rose 84% to $8.71 billion. Excluding certain items, earnings were $1.79 per share. Analysts expected sales of $8.71 billion and profits of $1.76 on average.

Data center-related revenue grew 400% in the quarter compared to the previous year, the company said. This unit now accounts for more than half of the company’s total sales. However, Micron said the increase was not enough to offset weak orders from device makers targeting consumers.

In this area, customers were building up inventory.

“We are now seeing a more pronounced impact of customer inventory reductions,” Micron said in an investor presentation. “We expect this adjustment period to be relatively short and expect customer inventories to reach better levels by spring.”

The company expects the personal computer market to grow by about 5% in 2025, with most of the expansion occurring in the second half. He commented that device owners are updating them more slowly than expected.

Micron said its mobile business unit suffered a 19% sequential decline, due to inventory reductions. Auto and industrial sales also declined.

For fiscal 2025, the chipmaker plans to spend $14 billion on new plants and equipment. This amount includes a reduction in planned spending on new production of storage chips.

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