Micron Shares (NASDAQ: MU) Retreat Despite Positive Outlook

Micron stock price trades down 1% in the pre-market session today, as the drop seen over the past week or two looks set to continue as the new week kicks off. Shares of Micron Technology (NASDAQ: MU) have recently experienced a significant pullback, dropping by 14% over the past 2 weeks.

This shift in sentiment comes after a strong rally, with Micron stock growing more than 100% in the preceding 12 months, and outperforming the wider market. This decline comes in the wake of the company's fiscal third-quarter 2024 earnings announcement, which, despite beating expectations, did not fully meet bullish analyst expectations.

In its FQ3'24 earnings report, Micron posted revenues of $6.81 billion, a gross margin of 28.1%, and an adjusted earnings per share (EPS) of $0.62. These figures indeed indicate a solid performance; however, the company's fiscal fourth-quarter 2024 guidance provided an outlook with expected revenue of around $7.6 billion and adjusted EPS of $1.08. This outlook fell short of beating the already bullish consensus estimates and evidently tempered the enthusiasm that had been boosting the stock's value.

Despite these immediate concerns, Micron projected an upbeat future, hinting at “record revenue and significantly improved profitability in fiscal 2025.” The company expects growth to be driven by factors such as high-bandwidth memory (HBM) sales and increased market share. This positive long-term outlook ties into the broader generative AI tailwinds currently influencing the technology sector.

Micron has reported an upsurge in capital spending from FY2025 onwards due to ongoing supply constraints. This investment will have to be delicately balanced against its obligations, as the company also faces debts maturing through 2027.

Despite the recent dip, Micron's stock price still hovers above the key support level at $130, after reaching a peak of $157.

As Micron moves forward with its extensive capital investment plans and aims to leverage upcoming market opportunities, investors will closely watch the company's performance metrics and market dynamics to evaluate the appropriate entry points for investment.