Micron shares fall, but AI rise signals future growth potential News ad

Investors are interested in Micron Technology NASDAQ: Manchester United One thing to celebrate is the fact that its shares fell after its 2025 first-quarter earnings report. The move is a knee-jerk reaction to mixed results and forecasts that point to short-term weakness and long-term strength caused by the shift to artificial intelligence.

Micron technologies today

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Micron Technology

$85.14 -18.76 (-18.06%)

(As of 11:04 a.m. ET)

52 week range

$78.63

▼

$157.54

Dividend yield

0.54%

P/E ratio

125.21

Target price

$138.59

Legacy business remains a challenge for Micron. The global semiconductor inventory dump is taking longer than expected due to end markets including PCs. However, this is offset by the power of next-generation technologies: Micron’s advanced data centers and artificial intelligence products, including industry-leading HBM3E memory chips. HBM memory is critical for AI because of the capacity and speed at which it operates. Micron’s HBM3E is the industry’s most advanced, delivering significantly better performance with lower power consumption, ideal for data centers and AI consumption.

Micron gives mixed results and weak recommendations; Projections of 35% growth

Micron delivered mixed results and weak guidance for the second quarter, but let’s be honest. The company delivered 84% year-on-year (YoY) revenue growth and wider margins to deliver record results, outperforming net income and forecasting another 35% YoY growth in the second quarter. Growth is slowing sequentially and year-over-year, but 35%, on top of last year’s 50% gain, is stable and the bar has been set high. Analysts raised their expectations throughout the year as demand for AI and the data center business helped strengthen peripheral markets such as memory. Given trends, Micron’s forecasts are likely to be cautious.

On a segmental basis, DRAM sales grew 20% sequentially and 86% year-over-year, driven by demand for HBM3 and supporting technologies. HBM sales more than doubled, and SSD sales were also strong. The company has seen an increase in market share in the solid-state drive segment and forecasts additional growth in the coming quarters.

Margin news is strong. The company’s adjusted operating margin was 27.5%, 50 basis points above MarketBeat’s consensus estimate, and a 500 basis point increase sequentially, offsetting the loss recorded in the prior year. The adjusted $1.79 is significantly higher than last year’s loss of $0.95 and nearly 200 basis points above forecasts. The bottom line is that Micron’s business is maintaining profitability and improving margins, with strength expected to continue this year, delivering positive free cash flow.

Micron invests in next-generation technology and growth

Micron’s balance sheet shows some changes, including a decline in cash year-to-date. However, the alarming signs are offset by increased spending on BMD technology and increased production to meet demand. As a result, cash flow is reduced, but the company remains well capitalized and increases its value to investors. Balance sheet highlights include increases in accounts receivable, current assets and total assets, only partially offset by increases in liabilities. Assets increased by $2.05 billion, or about 3%, while liabilities increased by less than $0.5 billion, or about 1.5%, resulting in a 3.7% increase in equity. Leverage remains low, with total liabilities around 0.5x equity, leaving the company in a strong financial position capable of meeting its dividend plans.

Analysts disappointed by Micron’s strong quarter

Analyst reactions to Micron’s results are mixed. Most of the activity is negative, including multiple price target cuts and Bank of America’s downgrade to Hold. However, the talk is optimistic, citing both near-term headwinds and expectations of an improvement in the second half of next year as legacy businesses return to growth. And not all amendments are negative. Rosenblatt maintained a Buy rating and a $250 price target, expecting the stock price to rise 150%. The consensus view on Micron stock is a Moderate Buy, and most analysts believe Micron shares are trading above $110.

The share price retreated 12% in early pre-market trading, but it may not have to move further. The stock is trading deep and above critical support on the long-term moving average. There is a risk that Micron could fall below the $85 level, but this is not expected due to its low 11x earnings multiple, strong results and long-term prospects for industry-leading results driven by demand for HBM3. The more likely scenario is that this market will quickly regain activity, reaffirming critical support levels as it recovers from post-release lows.

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