Micron’s Stock (MU) Delivers Year of Two Halves, With 15%+ Drop on Missed Outlook

Micron's stock price (NASDAQ: MU) has given holders a second half of the year to forget, with a decline of 39.33% coming off the back of today's 15.8% drop. The stock experienced a significant drop value following a missed outlook, falling short of Wall Street's revenue and profit expectations.

On a year-to-date basis, MU remains in the green to the tune of 6.24%, telling it's own story about the tale of two halves delivered up through 2024. Through the first 6 months of the year to mid June, Micron had gained a hugely impressive 86%, before taking an about turn.

Looking at the numbers, in Q1, Micron reported revenue of $8.71 billion, reflecting an 84% increase, which was in line with analysts' expectations. The earnings per share stood at $1.79, slightly surpassing expectations by 4 cents. Despite these solid figures, the company's second-quarter outlook appears weaker.

Micron expects revenue to fall to approximately $7.90 billion, against Wall Street's estimate of $8.98 billion, with earnings projected at $1.43 per share compared to the anticipated $1.91.

The primary concern for Micron revolves around tepid consumer interest in products central to their business, like PCs and smartphones. The DRAM chip market, a significant revenue source for Micron, remains sluggish, with forecasts of only low single-digit percentage growth for smartphones in 2025. Global PC shipments have also declined, showing a 1.3% reduction in the third quarter of 2024.

Amid these challenges, Micron sees promising demand in high-bandwidth memory (HBM) chips, prompting an increase in their production to meet market needs. This adjustment signifies an attempt to pivot towards segments with stronger growth potential. The fact this miss comes in the aftermath of a significant pullback in broader markets has likely seen Micron's shares punished a little harder than it may have been in different circumstances.

Micron Technology's current financial outlook highlights a nuanced position, contending with immediate market challenges while adjusting focus towards areas that promise better long-term prospects. Analysts' price targets continue to remain bullish, but if Micron doesn't show an improved set of results next time around, they may find the confidence fleeting.