| 21 February 2024, Wednesday |

US chip maker Micron stock dips despite upbeat earnings forecast

Micron Technology, the top US manufacturer of computer memory semiconductors, experienced a significant decline in its stock, marking its most substantial drop in two months. A Bloomberg report attributes this dip to the company’s announcement of unexpectedly higher operational expenses than previously forecasted.
The stock fell by as much as 4.6 per cent in New York, the steepest decline since September 28. However, Micron’s shares have surged 55 per cent this year.

Micron adjusted its operating expenses for the fiscal first quarter to $990 million, up from the previous estimate of approximately $900 million. Despite the upward revision in revenue outlook to $4.7 billion from $4.6 billion, investors were anticipating a significant increase.
Wolfe Research analyst Chris Caso explained that the stock decline may be attributed to elevated expectations as a result of increasing pricing trends toward the year-end. Investors have been closely monitoring the semiconductor industry, anticipating that heightened demand for smartphones and personal computers would benefit chipmakers like Micron.

The rebound in semiconductor prices had initially fuelled optimism, but it seems that expectations may have surpassed the current reality. “We believe the stock is down due to rising expectations given increasing pricing trends heading into year-end,” Bloomberg quoted Caso as saying.

Micron’s Chief Executive Officer, Sanjay Mehrotra, addressed concerns at the UBS Global Mobility Technology Conference, acknowledging that expenses for the quarter were notably higher than predicted due to increased research and development costs. However, Mehrotra assured investors that these expenses would decrease in the quarter ending in February.

Despite the challenges, Micron remains optimistic about pricing outlook, asserting that a return to profitability is imminent. “We have said that for a while that 2025 we believe will be a record year for the industry. 2024 will be the year of recovery,” the company’s statement read.

Micron is scheduled to release its official first-quarter results on December 20.

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