CEO Sanjay Mehrotra attempted to quell the market’s concerns by promising “AI-driven growth” for the future
After tumbling 4.33% during Wednesday’s trading session amid a rough day for technology stocks, chip and AI stock Micron Technology (NASDAQ:MU) crashed an additional 12% in premarket trading Thursday.
The slump came in spite of the firm posting an earnings beat for its first quarter of fiscal 2025 (ending November).
Specifically, Micron generated revenue of $8.71 billion, marking a substantial improvement over $4.73 billion from the year-earlier quarter and falling in line with the analysts’ consensus estimate.
Furthermore, Micron reported Q1 FY2025 adjusted (non-GAAP) net income of $1.79 per share, slightly ahead of Wall Street’s consensus forecast of $1.76 per share.
However, Micron’s outlook for the second quarter of fiscal 2025 disappointed investors. The company guided for current-quarter revenue of $7.9 billion plus or minus $200 million, while Wall Street was looking for $8.9 billion.
Analysis: Micron’s “return to growth” will be a show-me story
Micron’s chief executive, Sanjay Mehrotra, attempted to quell the market’s concerns. “While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year,” the CEO assured.
Given the share-price contraction, it’s fair to conclude that the market isn’t currently convinced that Micron will “return to growth” in the near term. Most likely, jittery traders focused on the “consumer-oriented markets are weaker” warning as well as Micron’s lower-than-expected current-quarter sales guidance.
Mehrotra also appealed to the market’s penchant for artificial intelligence (AI) technology integration. The CEO claimed that Micron is “exceptionally well positioned to leverage AI-driven growth to create substantial value for all stakeholders.”
A year or two ago, the mere mention of AI may have been enough to prop up the stock of a famous tech name like Micron. The times are changing, though, and now the market might need to see the leveraging of Micron’s “AI-driven growth” in the current quarter’s financial figures.
Micron won’t have a chance to release those stats and thereby demonstrate its “AI-driven growth” for another three months. Until then, Micron stock could be vulnerable to further downside movement as Thursday’s session kicks off with heavy MU share selling on high trading volume.
