(Bloomberg / Dina Bass) — Shares of Micron Technology Inc., the largest US maker of computer memory chips, fell after the company reported that margins will miss analysts’ estimates this quarter.
Micron’s gross margins were 37.9% in the second quarter on an adjusted basis, the company said in a statement Thursday. That missed the average 38.4% analyst estimate compiled by Bloomberg. The forecast for the current period, roughly 36.5%, also fell short of predictions.
The metric was likely hit by pricing for NAND flash memory products, which may improve later in the year, analysts at Bernstein said in a note after the results. It was the first time time Micron’s margins have narrowed since an industry glut turned them negative in 2023.
“There has been a challenging industry environment in NAND,” Executive Vice President Sumit Sadana said in a call with analysts. “As the industry environment improves, particularly in NAND, you will see a much better trajectory from us.”
Micron shares fell 8.3% at 9:33 a.m. in New York on Friday. The stock, up 22% this year through Thursday, had closed at $103.
The margins took attention from an otherwise strong sales forecast for the current quarter, bolstered by demand for artificial intelligence products.
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Fiscal third-quarter revenue will be about $8.8 billion, the company said. That compares with an average analyst estimate of $8.55 billion. Profit will around $1.57 a share, excluding certain items, compared with the $1.48 analysts expected on average.
Micron is seeing strong demand for components used in data center machines that develop and run artificial intelligence software. Its traditional markets — chips for phones and PCs — have been weaker. But they have been showing signs of recovery.
Second-quarter sales climbed 38% to $8.05 billion, Boise, Idaho-based Micron said. Analysts had predicted $7.91 billion. Earnings grew to $1.56, minus certain items, topping the $1.43 prediction.
“Data center revenue tripled from a year ago,” Chief Executive Officer Sanjay Mehrotra said in the statement. “We are on track for record revenue and significantly improved profitability in fiscal 2025.”
The company’s high-bandwidth memory, or HBM, has become a vital piece of AI systems. Revenue from that technology crossed $1 billion in the second quarter, Micron said, citing “strong execution and robust AI demand.”
(Updates with share move in the fifth paragraph.)
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