Micron stock was trading at $49.55 as of 10:09 AM EDT
After the close of trade, Micron Technology (NASDAQ:MU) will release its fourth-quarter financial results. The memory chip manufacturer may continue to experience difficulty in its two core markets as prices for NAND and dynamic random access memory have been falling steadily lately.
Western Digital (WDC) and Micron (MU) were both downgraded last week by investment company Mizuho, which cited recent inspections showing “steepening pricing decreases” going into the upcoming quarter and the first half of 2019.
Vijay Rakesh lowered his rating from buy to neutral after observing that the data center and server sectors are beginning to exhibit signs of weakness, particularly “with softening demand in China/Europe and slowing CPU/GPU ramps.” According to analyst consensus, Micron (MU) is anticipated to earn $1.38 per share on $6.78 billion in revenue.
Sanjay Mehrotra, the chief executive of Micron (MU), recently stated that the company has started construction on its previously announced $15 billion factory in Idaho and will shortly be announcing another U.S.-based unit.
According to Citi analyst Atik Malik, DRAM prices have lately continued to fall rapidly, with server prices dropping under $100 this quarter as well. Additionally, Micron Technology (MU) may reduce spending by up to 40% since prices do not appear to be bottoming out this quarter or the following.
Micron stock, earnings expectations
In a recent note to clients, Malik stated, “Assuming a 10% DRAM demand bit increase next year, we model a DRAM CAPEX reduction of 30% or in-line with [the] 2018/19 correction.” As a result, Malik continued, it is likely that Micron (MU) expects fiscal 2023 spending to be between 35% and 40% lower than $12B in fiscal 2022.
Wafer fab equipment and CAPEX investment are expected to decline “substantially,” according to earlier statements made by Micron (MU), Malik said. The analyst noted that while there is still modest growth from the smartphone and PC industries, channel inventory is approximately 10 weeks old, and some hyperscalers have engaged in some “opportunistic” buying for the first half of 2023. The financial services provider, J.P. Despite an increase in industry negativity, Morgan claimed that memory chip manufacturers like Micron (MU) were starting to become more appealing.
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