Why Micron Stock Dove Today
Key PointsMicron stock slumped after competitor Sandisk delivered surging growth.
Micron stock experienced a sharp decline on Friday morning, initially plummeting as much as 5.9% before settling at a 4.7% decrease by 11:28 a.m. ET. The primary reason for the drop was the strong financial report released by rival memory chipmaker Sandisk, which raised investor concerns about the future of artificial intelligence (AI).
Sandisk's fiscal 2027 first quarter, ending on October 2, reported revenue that surged 378% year over year and 23% quarter over quarter to $11 billion. This led to adjusted earnings per share (EPS) of $49.51, more than a 40-fold increase from the consensus estimates of $46.67. The company's data center revenue expanded by an astounding 1,682% year over year to $4.8 billion, and edge computing revenue rose 320% to $5.8 billion.
Sandisk's second-quarter forecast surpassed Wall Street's expectations, projecting revenue of $12.4 billion and an adjusted gross margin of 85%. Despite Micron and Sandisk stocks having increased by 488% and 293% respectively over the past year due to surging AI demand, investors are now wary of the sustainability of this growth.
The performance of Micron, Sandisk, and SK Hynix memory chipmakers is closely correlated, a trend that continued on this day. With Micron trading at just 12 times earnings, some analysts view this as a potential buying opportunity for investors who believe AI still has room to grow.
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