Micron Technology Down Amid Sluggish Demand

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Micron Technology Down Amid Sluggish Demand

Micron Technology (MU) Down By 5% Amid Sluggish Demand

Micron Technology (MU) has issued a loss forecast for the 1st quarter, which has caused some serious concerns among investors. One of the biggest takeaways is that the recovery in the chips market is sluggish at best.

After the data release, the shares of Micron Technology dropped by 5% during Thursday's early trading session. This suggests that the investors are not happy with the recent forecast made by the chip company.

A day earlier, Micron Technology made a forecast about how the losses during the quarter might be a lot higher than the expectations. At the same time, the company made a forecast about the gross margin turning positive during the 2H2024. Once again, the market was expecting it to happen a lot sooner (during the 1H2024).

Chips Inventory Build-Up Almost Over

Micron (MU) is facing a demand slump & thus is not able to utilize 100% production capacity at its manufacturing plants. However, experts believe that the high inventory of microchips is almost finished, which means the demand might return.

Some of the tech products where Micron Technology (MU) chips are used involve personal computers and smartphones. So, if we consider this fact, it also tells us that both of these markets are also going through a downturn.

Last year, the excessive supply & sluggish demand pushed the prices lower, which ended up hurting the profit margin of Micron Technology. According to an Evercore ISI analyst, the situation has improved a little bit, but the pace is slow.

However, some experts believe that the recent boom in the AI industry will allow Micron Technology (MU) to boost its sales. In fact, many are even producing hundreds of millions of dollars in extra revenue from the sales of new AI-friendly chips made by the company.

In addition, Micron Technology is also trying to become a supplier of Nvidia (another chip company). If this materializes, it will mean the company's sales & revenue will also improve.

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