Micron Stock Declines 23%: Is Nvidia’s CFO Indicating a Potential Recovery?

Key Points

• Micron Technology’s (NASDAQ: MU) revenue reached $41.4 billion in Q4 of fiscal year 2023, significantly up from $9.3 billion a year prior, showcasing a growth largely fueled by price increases and demand from AI companies like Nvidia.

• Despite a dramatic increase in stock value—almost 700% over the past year—Micron’s shares have recently fallen 23% from their highs due to tapering enthusiasm in the AI sector.

• Nvidia’s recent earnings call indicated that memory chip shortages will persist, which may positively impact Micron’s profitability in upcoming quarters.

Micron’s gross margin soared to 85% last quarter, with an impressive operating income of $33.3 billion, equating to an operating margin of 80%. The company is expected to maintain strong performance, projecting $50 billion in revenue for the most recent quarter ending in August 2023, and potentially reaching $200 billion in operating earnings over the next calendar year.

As the AI sector continues to experience growth, executives have cited memory chip shortages as a key bottleneck, which could sustain Micron’s upward trajectory in revenue and profits into 2027. However, analysts caution that historical cycles of oversupply could impact future earnings.