Shares of Micron Technology (MU) cratered more than 15% on Thursday following the company’s latest earnings report.
Micron released its most recent quarter’s operating results, which were mixed, after the close on Wednesday night. The report showed earnings per share that were $0.03 better than analysts’ target.
The earnings beat came on lighter than expected revenue that still grew 84% over the same quarter last year. Micron’s revenue results were driven by continued strength in AI demand but weaker consumer-facing product demand.
The company saw lackluster PC, mobile, and automotive demand last quarter. According to Micron, The PC refresh cycle is unfolding slowly and Micron expects volume growth to be flat, below its prior outlook.
Micron management is still bullish on AI PC adoption over time, which will require more DRAM content, given the resources AI consumes.
The company also commented that automotive production is slowing and that consumers are shifting their tastes toward value-trim vehicles from premium models and EVs.
The shift in consumer automobile demand creates speedbumps for Micron as it reduces memory and storage content demand.
Micron is optimistic that advanced driver assistance systems, infotainment, and AI adoption across the automotive industry will propel long-term content growth but not until late 2025.
The results caused investors some concern, but Micron’s guidance is what sparked today’s sell-off.
The summary of Micron’s outlook has investors dropping their valuation of the stock, putting shares in a technically concerning situation.
Looking at Micron’s chart, the stock’s drop takes shares back to their summer lows.
Micron spent much of the summer trading in a wide range with a lower price of $85. Shares sit at that same lower range price after today’s decline.
A break below this price will engage a new wave of long-term sellers given the company’s earnings guidance.
In addition, Micron shares’ move below $85 also puts the stock below its long-term 20-month moving average. From a technical perspective, this puts the stock in a long-term bear market trend.
Investors should expect a short-term move higher as the stock is likely to see a “dead cat bounce” followed by an increase in the stock’s negative momentum.
Shares of Micron are downgraded to a neutral-to-bearish outlook with a price target of $75.
