A once trendy derivative play on the artificial intelligence boom has suddenly fallen on hard times after posting a rough earnings report. Shares of Micron Technology plummeted nearly 18% after the chipmaker issued weak fiscal second-quarter guidance . Boise, Idaho-based Micron topped estimates in its most recent quarter just ended, but its current-quarter forecast was far below the $1.91 earnings per share and $8.98 billion in revenue expected by analysts polled by LSEG. Shares are now up less than 3% on the year while the S & P 500 has ripped 24% higher. MU YTD mountain Micron shares this year Mi ron’s update caused a stir on Wall Street, leading Bank of America analyst Vivek Arya to downgrade the stock to neutral, citing expectations for continued pressure on gross profit margins for the next two quarters resulting from struggling memory pricing caused by weak PC and phone markets. “Historically the stock has struggled to outperform when [gross margin] expansion has remained muted, leading to our stock downgrade to Neutral from Buy, even though we still feel positive about MU’s position in the [high-bandwidth memory]/AI market where [total addressable market] was taken up +20% for CY25 to $30bn,” Arya wrote. Morgan Stanley’s Joseph Moore lowered his estimates on Micron, saying that commodity chip weakness should offset significant AI growth in the near term. He expects weakness in the NAND market to contribute to a potential 20% decline in revenue in February. Writing before the market opened Thursday, Moore said Micron looked expensive at then current prices, while also noting surprise at the magnitude of the post-earnings move late Wednesday. Moore cut his 12-month price target to $98 a share from $114, implying about 6% downside from Wednesday’s close. Other Wall Street firms followed suit. Wells Fargo analyst Aaron Rakers moved to a $140 target from $175, saying consumer PC and smartphone weakness is overshadowing ongoing strength in demand. The lower target still implied roughly 35% upside from Wednesday’s close. Goldman Sachs analyst Toshiya Hari adjusted his target to $128 from $145, while JPMorgan’s Harlan Sur revised his to $145 from $180. Both firms kept their bullish recommendations on Micron. “Despite the near-term weakness, we continue to believe the down-cycle in memory will be short-lived and expect market conditions to improve in the latter part of 2025 as leading-edge DRAM supply remains tight and strong AI server demand continues to drive growth,” in high-bandwidth memory (HBM), JPMorgan’s Sur wrote. UBS analyst Timothy Arcuri retained his buy rating on Micron, calling the pullback a buying opportunity. “Quite simply, we continue to believe MU’s leadership in HBM will be transformational for margins and its market position and what we heard on this [management conference] call only makes us more convinced in this view,” Arcuri wrote.
This once hot AI-derivative play is plunging. What Wall Street says now
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