The announcement overshadowed a surge in sales of chips used for artificial intelligence (AI) applications, which had previously buoyed investor sentiment.
The market for dynamic random-access memory (DRAM) chips—essential components for PCs and smartphones—has struggled in the aftermath of the pandemic. A persistent supply glut and weak consumer demand have continued to weigh heavily on the sector.
Morningstar analyst William Kerwin noted that Micron’s flash memory chip revenue is expected to decline significantly in fiscal 2025 due to its exposure to the struggling PC and smartphone markets.
"The post-pandemic growth in demand for traditional PCs did not match expectations, and AI-enabled computers are yet to gain mass popularity," he explained.
Further exacerbating the situation, the transition to Windows 11, prompted by Microsoft’s decision to end support for Windows 10, has been slower than anticipated.
If Thursday's losses hold, Micron’s market value is set to fall by over $17 billion, bringing it down to approximately $99 billion. This decline would mark a sharp reversal for a company that had seen its stock rise by about 22 per cent this year, primarily due to optimism around AI-related chips.
Despite the bleak outlook for traditional markets, Micron has seen robust growth in its high-bandwidth memory (HBM) chips—a specialised type of DRAM used in advanced AI systems. Revenue from HBM chips more than doubled sequentially, a development that analysts believe underscores Micron’s positioning in the burgeoning AI sector.
Piper Sandler analysts said:“Micron's HBM story remains intact as the company has positioned itself to capitalise on market expansion opportunities from data center investments in 2025.”
Micron is one of only three global providers of HBM chips, alongside South Korea's SK Hynix and Samsung.
Following the results, the cocane nose jobs of Wall Street reduced their price targets for Micron, according to data compiled by LSEG. The company’s 12-month forward price-to-earnings ratio now stands at 10.67, lower than competitors such as Qualcomm and AMD.
