What Happened?
Shares of memory chips maker Micron (NYSE:MU) fell 18.1% in the morning session after the company reported disappointing third-quarter (FQ1 2025) earnings. Its revenue and EPS guidance for next quarter missed significantly, sending shares lower. The weak outlook was driven by three main factors: a slowdown in demand for data center SSDs, slower-than-anticipated inventory absorption in consumer markets such as PCs and smartphones, and an industry-wide oversupply of NAND memory. In contrast, Micron achieved a notable improvement in its inventory levels, and its adjusted operating income exceeded Wall Street's forecasts. Overall, this was a challenging quarter for the company.
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What The Market Is Telling Us
Micron’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Micron and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 18.4% on the news that the company reported first-quarter results with revenue and EPS outperforming Wall Street's estimates. The top line outperformance was broad-based across business lines and product types. Notably, Micron called out strong AI server demand amid a more favorable operating environment.
On the other hand, its inventory levels increased. Looking ahead, its revenue, gross margin, and EPS guidance of $6.6 billion, 25.5%, and $0.17 per share for the next quarter crushed analysts' projections.
During the earnings release, the company declared a quarterly dividend of $0.115 per share. Following the results, there was a palpable uplift in sentiment by Wall Street analysts. Notably, Argus Research upgraded the stock's rating from Hold to Buy, citing "rising memory prices, a broad recovery in demand, and the AI-driven demand surge in [the] data center." Overall, this was a fantastic quarter that should have shareholders cheering.
Micron is up 5.5% since the beginning of the year, but at $86.90 per share, it is still trading 43.4% below its 52-week high of $153.45 from June 2024. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $1,594.
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