Micron expects lower profit and growth in 2025

Micron expects lower profit and growth in 2025

Budrigannews.com – On Tuesday, Micron Technology Inc. predicted that third-quarter revenue would decrease by nearly 60% from a year earlier. However, the sharp decline was in line with Wall Street expectations, and executives of the company projected a bright future for sales in 2025 as artificial intelligence increased.

Micron anticipates the sharpest decline in revenue since 2001 due to the chip industry’s persistent glut. Micron said it would save speculations at about $7 billion for financial year 2023, the lower end of a formerly expressed range. This year, it intends to reduce its workforce by 15%, exceeding its previous goal of 10%.

In after-hours trading, Micron shares were up about 5%.

Wedbush Securities chip analyst Matt Bryson stated that the reduction in capital spending would “pull forward the timing and breadth of a future recovery,” which was beneficial to investors.

NASDAQ: Micron Technology On an earnings call, President and CEO Sanjay Mehrotra told analysts that he was optimistic about the long term and predicted that the memory chip market would reach a record size in 2025.

“AI is the future when you look at it. “Micron is well positioned with our technology and product road maps to address the growing opportunities there,” he added. “And AI equals memory.”

a rise in the number of generative AI chatbots, like Microsoft’s (NASDAQ:) The demand for data centers has increased as a result of OpenAI’s ChatGPT, which is backed by a corporation, reversing a trend of declining chip demand. According to analysts, the rise in the demand for storage may be fueled by the expansion of generative AI.

According to Sumit Sadana, Chief Business Officer of Micron, a typical AI server has up to eight times as much DRAM and three times as much NAND as a typical server. NAND memory stores data even when the device is off, whereas DRAM memory erases when the device is turned off.

Sadana expressed that regardless of the close term difficulties, the new manufacturing plants in Idaho and New York are on time to separately begin development this year and one year from now. ” When it comes to submitting an application for funding through the CHIPS and Science Act for those plants, he stated, “We are making good progress in terms of our chips application.”

Micron said that customer inventories are getting better and that the industry’s supply-demand balance will get better over time. Additionally, it stated that the chip glut will continue to improve gross margins.

According to data from Refinitiv, the business anticipates revenue of $3.70 billion, excluding $200 million, which is in line with the average estimate given by analysts.

The company lost $2.3 billion in the second quarter, compared to a profit of $2.26 billion a year earlier. Revenue for the quarter decreased by approximately 53% to $3.69 billion.

In contrast to Wall Street’s expectation of 90 cents per share, Micron anticipates a loss of $1.58 per share, excluding items, plus or minus 7 cents in the current quarter.