(Reuters) – Micron Technology’s first-quarter loss forecast has sparked concerns about a slow recovery in the memory chip maker’s end-markets, including data centers. This has caused its shares to decline about 5% in premarket trading on Thursday.
The company announced on Wednesday a larger loss than what analysts had expected. Additionally, they forecast a return to positive gross margin in the second half of fiscal 2024, which is later than Wall Street’s expectations for the first half.
Micron has been adjusting its production capacity to align with the decrease in demand for memory chips since last year. However, analysts have noted that excess inventory seems to have cleared in most of its end-markets, such as smartphones and personal computers.
The company’s profit margin has been negatively affected by low memory prices since early last year.
“The recovery path is off to a slow start,” stated analysts at Evercore ISI in a note.
Nevertheless, analysts remain optimistic that the artificial intelligence (AI) boom will enhance the company’s overall prospects. Micron expects to generate “several hundred million” dollars in revenue next year from its new high-bandwidth chips designed for AI applications.
Micron also disclosed on Wednesday that it is working towards becoming a supplier for AI chip giant Nvidia.
For the current quarter, the company predicts an adjusted loss per share of $1.07, surpassing analysts’ estimates of a loss of 95 cents per share.
Citigroup now projects that Micron will report a loss of $1.79 per share in fiscal 2024, compared to its previous estimate of a 99 cent profit.
Last year, a correction across the semiconductor industry led to a nearly 50% decline in Micron’s shares. However, the company has since recovered most of those losses, with shares rising approximately 36% in 2023 as investors anticipate a rebound.
According to data from LSEG, Micron’s price-to-earnings ratio for the last twelve months stands at a negative 16.3.
(Reporting by Chavi Mehta and Yuvraj Malik in Bengaluru; Editing by Devika Syamnath)
Credit: The Star : Tech Feed
