Shares of Micron (MU 2.67%) have been sliding final month after the memory-chip maker supplied disappointing steering in its fiscal first-quarter earnings report.
The sell-off following the report worn out some stable beneficial properties, because the inventory rose earlier within the month after the Commerce Division finalized a $6.17 billion subsidy associated to the CHIPS Act for the corporate to construct new manufacturing vegetation in New York and Idaho.
In line with knowledge from S&P International Market Intelligence, the inventory completed the month down 14%. As you’ll be able to see from the chart, shares fell sharply after the earnings report got here out in the course of the month and stayed down from there.
Steering journeys up Micron
Previous to the earnings report, the one important information on Micron was the CHIPS Act award being finalized, however that cost had been broadly anticipated, so it is unclear if it immediately fueled Micron’s beneficial properties within the first half of the month.
The inventory then plunged 16% on Dec. 19 after it launched first-quarter outcomes. The corporate really edged previous estimates within the quarter and posted robust year-over-year progress. Income jumped 84% to $8.71, primarily matching estimates at $8.7 billion, and adjusted earnings per share got here in at $1.79, which in comparison with a per-share lack of $0.95 within the quarter a yr in the past, and topped the consensus at $1.77.
Nevertheless, traders balked at fiscal second-quarter steering, as the corporate referred to as for a sequential decline in income and earnings, seeing income of $7.7 billion-$8.1 billion, which was nicely beneath the consensus at $8.97 billion, and adjusted EPS of $1.33-$1.53, additionally beneath the consensus at $1.77.
Administration blamed weak near-term demand in “consumer-oriented markets” however anticipated a return to progress within the second half of the yr.
Picture supply: Getty Photographs.
What’s subsequent for Micron?
Micron shares have rebounded to begin 2025 within the wake of pleasure round Nvidia naming the corporate as a key provider for its GPUs. Nvidia is believed to be Micron’s greatest buyer, so the connection seems to be getting stronger, which ought to be profitable for Micron.
By means of Jan. 7, the inventory is up 21% for the month. It continues to appear to be a discount, buying and selling at a ahead P/E ratio of 14.5, and it is rising quickly following an earlier lull in reminiscence chips.
The inventory might simply transfer larger from right here, particularly if the substitute intelligence (AI) growth picks up steam.
Jeremy Bowman has positions in Micron Know-how and Nvidia. The Motley Idiot has positions in and recommends Nvidia. The Motley Idiot has a disclosure coverage.
