Dec 19 (Reuters) – Micron Technology shares tumbled 15% in premarket trading on Thursday after issuing a dismal forecast that sales of artificial intelligence-related chips would be affected by weak demand for PCs and smartphones. strong growth.
The market for dynamic random access memory (DRAM) chips, the company’s largest source of revenue, has been under pressure since the end of the pandemic as a supply glut persists.
Morgan Stanley analysts said the DRAM market appears unhealthy and is slowly deteriorating, with the biggest weakness being older technology, which usually indicates an oversupply.
Micron expects smartphones to achieve low-single-digit percentage growth in 2025.
Meanwhile, the company’s revenue from high-bandwidth memory (HBM) chips, a type of DRAM chip used to power advanced artificial intelligence systems, more than doubled sequentially.
“Micron Technology’s HBM story remains intact as the company positions itself to capitalize on market expansion opportunities arising from data center investments in 2025,” Piper Sandler analysts said.
The Boise, Idaho-based company is just one of three major HBM chip suppliers, along with South Korea’s SK Hynix and Samsung.
Demand for HBM chips has helped Micron Technology’s shares rise about 22% so far this year, and analysts expect it to remain a major driver.
At least six brokerages cut their target prices on the stock after the results, according to the London Stock Exchange.
Micron’s 12-month forward price-to-earnings ratio is 10.67, lower than Qualcomm’s 13.4 and Advanced Micro Devices’ 23.97.
(Reporting by Joel Jose in Bengaluru; Editing by Sriraj Kalluvila)