Micron Technology, the leading US producer of computer memory semiconductors, experienced a significant decline in its stock on Monday, marking the most substantial drop in two months. This dip follows the company’s announcement that it is incurring higher operational expenses than initially projected.
The stock fell by as much as 4.6% in New York, representing the steepest decline since September 28. Nevertheless, Micron’s shares have surged by 55% this year.
Micron adjusted its operating expenses for the fiscal first quarter to $990 million, up from the previous estimate of approximately $900 million. Despite the upward revision in revenue outlook to $4.7 billion from $4.6 billion, investors were anticipating a more substantial increase.
Wolfe Research analyst Chris Caso explained that the stock decline may be attributed to elevated expectations resulting from increasing pricing trends toward the year-end. Investors have been closely monitoring the semiconductor industry, anticipating that heightened demand for smartphones and personal computers would benefit chipmakers like Micron.
The rebound in semiconductor prices initially fueled optimism, but it appears that expectations may have surpassed the current reality. Caso stated, “We believe the stock is down due to rising expectations given increasing pricing trends heading into year-end.”
Micron’s Chief Executive Officer, Sanjay Mehrotra, addressed concerns at the UBS Global Mobility Technology Conference, acknowledging that expenses for the quarter were notably higher than predicted due to increased research and development costs. However, Mehrotra assured investors that these expenses would decrease in the quarter ending in February.
Despite the challenges, Micron remains optimistic about the pricing outlook, asserting that a return to profitability is imminent. The company’s statement emphasized, “We have said that for a while that 2025 we believe will be a record year for the industry. 2024 will be the year of recovery.”
Micron is scheduled to release its official first-quarter results on December 20.
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