19 December 2024
If you are covering Micron's latest results, please see the following comment from Ben Barringer, technology analyst at Quilter Cheviot:
"Micron posted a roughly in line set of numbers but has lowered its guidance by 12% below consensus for the coming quarter. This saw the stock take a 15% hit after hours.
"The PC and smartphone industries had been expecting some impact from AI this year, Micron included. This hinged on new AI PCs and AI phones, as well as some macro changes, which it was hoped would help increase the growth rate of these industries. However, the refresh rate – or when people are buying new ones – has not been as strong as expected.
"This has impacted both DRAM and flash memory, the processors and storage used within computers, and Micron's customers now have much more inventory than needed. As a result, we have seen supply begin to exceed demand in the memory industry, and this is reflected in the price of DRAM.
"Importantly, Micron’s high bandwidth memory data centre, which is used by the likes of Nvidia, grew 400% year on year and now makes up 50% of revenues for the business. This is positive for the AI datacentre piece, but less so for ‘edge AI’ such as PCs and smartphones.
"Micron has guided well below consensus, and its share price has suffered as a result. The PC and smartphone side of the business has performed poorly, but its AI datacentre demand has been good. Nonetheless, the memory industry is incredibly sensitive to supply and demand imbalance, and at the moment supply appears to be exceeding demand in some areas.
"This print is not a good indicator for the industry as a whole, but ultimately it should not impact AI semiconductors."
