Despite a stellar earning performance for its fiscal first quarter of 2025, Micron Technology poured cold water on investors’ expectations for an ebullient outlook with second quarter guidance burdened by ongoing inventory challenges.
The second quarter forecast appeared to shock many company watchers, as the Internet content mill in recent weeks has been filled with hype about the potential for MU stock to soar after its latest earnings report. Instead, MU plummeted almost 20% around mid–day on Dec. 19, the day after the earnings report.
The fiscal Q1 performance itself can’t be blamed, as Micron posted $8.7 billion in overall revenue, beating estimates and out-shining the $7.75 billion intake during the fiscal fourth quarter and the $4.7 billion in sales for the fiscal first quarter of 2024. Meanwhile, profit soared to $1.87 billion after an $887 million quarter last time out and a loss of $1.2 billion in fiscal Q1 2024. Revenue from the data center market, where Micron’s latest high-bandwidth memory chips are being featured in accelerated computing architectures targeting AI training and inference, was up a whopping 400% year-over-year and 40% sequentially, enabling that segment to contribute more than 50% of the company’s overall revenue for the first time.
“We delivered record revenue in data center SSDs and achieved new records in market share for data center SSDs and overall SSDs,” said Micron CEO Sanjay Mehrotra, during the fiscal Q1 earnings call. “Our HBM shipments were ahead of plan, and we achieved more than a sequential doubling of HBM revenue. Revenue from our largest data center customer was approximately 13% of total company revenue. The HBM market will exhibit robust growth over the next few years.”
Yet, of the short term, he added, “We had previously shared our expectation that customer inventory reductions in the consumer-oriented segments and seasonality would impact fiscal Q2 bit shipments. We are now seeing a more pronounced impact of customer inventory reductions. As a result, our fiscal Q2 bit shipment outlook is weaker than we previously expected. We expect this adjustment period to be relatively brief and anticipate customer inventories reaching healthier levels by spring, enabling stronger bit shipments in the second half of fiscal and calendar 2025.”
The memory market has proved to be a volatile one throughout 2024, as prices were expected to increase and benefit memory suppliers, but research firm TrendForce reported in late September that customers were milking their own inventories to avoid the price hikes.
For its fiscal second quarter, Micron is now forecasting revenue in the range of $7.9 billion, plus or minus $200 million.
Mehrotra’s optimism about things improving toward the middle of the year could be based on that being the expected timing for a boom in adoption of Nvidia’s Blackwell-powered GB200 system, which Micron’s 9550 SSDs were designed into. Earlier this year, there were fears that Micron could be dealt a blow by reported delays in the Blackwell GPU. The Blackwell devices started shipping before the end of 2024, as scheduled, but in light volumes that are expected to increase as 2025 rolls on.
Separately, a Micron executive recently told Fierce Electronics that the company expects growing demand in the automotive sector for its chips as robotaxi projects and other opportunities ramp up.