What Happened?
Shares of memory chips maker Micron (NYSE: MU) fell 8.8% in the afternoon session after the company reported first-quarter (fiscal Q2 2025) results, which came with high expectations, but while the overall performance was decent, softness in key markets, weaker margins, and inventory concerns overshadowed the positives.
Notably, inventory levels saw a material increase, partly due to weakness in the automotive and mobile segments. Additionally, declining NAND prices put pressure on margins, resulting in a significant sequential drop in profits. While the DRAM business continued to show strong year-over-year growth and remained a key driver, sequential sales declined, raising questions about the sustainability of demand for memory devices used in AI computing platforms.
On the bright side, Micron exceeded analysts' expectations on both revenue and EPS. More importantly, its guidance for the next quarter came in ahead of Wall Street forecasts. That said, management flagged concerns about NAND oversupply and pricing pressures, which could weigh on future margins and revenue.
Overall, this was a mixed quarter with significant areas of concern.
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What The Market Is Telling Us
Micron’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock gained 8.4% as markets experienced a boost after data from the Bureau of Labor Statistics revealed that inflation for the month of February 2025 came in better than expected. The CPI rose 0.2% from the previous month (vs estimates for a 0.3% increase), while headline inflation rose 2.8% year on year (vs estimates for a 2.9% y/y increase). The data revealed inflation continued to edge closer to the Fed's 2% target, but not quite there yet. The reaction wasn't anything wild, but the sentiment leaned positive. The Nasdaq led the way, climbing 1.4%, boosting some tech stocks.
Micron is up 9% since the beginning of the year, but at $95.22 per share, it is still trading 37.9% below its 52-week high of $153.45 from June 2024. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $2,489.
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