Micron's Blockbuster Earnings Can't Prevent Share Drop
Micron Technology (MU) reported blockbuster earnings, but the stock is still set to fall at the open. Here's what traders and investors need to know.
Earnings triple, but shares drop
Micron reported a massive earnings beat, with revenue tripling in the latest quarter, sailing past analysts' estimates. But in premarket trading, shares look set to fall by around 5.3% as of 07:02 a.m. E.T.
A strong run leads to profit taking
Despite the steep drop, Micron's stock has had a spectacular year. The stock is up more than 350% over the past year, thanks to a memory supply shortage driven by surging demand for Nvidia's AI chips. Citi analysts chalked up the pre-market move to "some profit taking after a strong run" and maintained a buy rating on the stock.
Investors debate Micron's future
"The big investor debate on the stock is if the stock will continue to rise with rising DRAM prices, like during the Windows PC DRAM cycle in the 1990s," wrote Citi analysts.
Goldman Sachs expects the stock to be range-bound in the short-term and kept its rating on the stock at neutral, flagging the "potential risk of slowing HBM price momentum in 2027 given the prospects of meaningful supply additions".
Stellar earnings fail to translate into meaningful share price movement
Micron's muted market reaction isn't an isolated incident. Nvidia also reported a blowout quarter recently, but its stock fell 5% on the day, reflecting investor caution over recent stellar gains as well as wider concerns about its leadership in the artificial intelligence race.
Banks raise Micron price targets
Despite the muted market reaction, several banks raised their price targets for Micron stock. Wells Fargo updated their forecast to $550 per share from $470, while Barclays raised its target to $670 from $450.
Will Micron's stock price continue to rise with rising DRAM prices, or is it time to take profits? Market-savvy traders and investors are keeping a close eye on this memory-maker's next move.
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