Investing.com -- Shares in Micron (NASDAQ:MU) slumped in premarket U.S. trading after the U.S. chipmaker unveiled a current quarter financial outlook that disappointed sky-high investor expectations fueled by a surge in enthusiasm around artificial intelligence.
Idaho-based Micron said it expects to deliver revenue of $7.6 billion, plus or minus $200 million, in its fiscal fourth quarter, roughly in line with estimates of $7.6 billion, according to LSEG data cited by Reuters. For the three months ended May 30, Micron reported revenue of $6.81 billion, compared with projections of $6.66 billion.
Analysts flagged that they were looking for stronger guidance from the company, which makes high-bandwidth memory chips regarded as potential candidates for training the large language models that undergird AI applications. Micron has been a major beneficiary of the recent AI craze, with its shares more than doubling in value over the past one-year period.
"[E]xpectations were clearly elevated ahead of Wednesday’s print," analysts at Stifel said in a note to clients.
In a post earnings call, Micron Chief Executive Sanjay Mehrotra also said that the group expects to see capital expenditures increase "materially" in its 2025 fiscal year to help support HBM assembly and testing. In 2024, Micron anticipates the spending figure be approximately $8 billion.
Mehrotra added that its HBM chips -- which are used in cutting-edge processors designed by AI-darling Nvidia (NASDAQ:NVDA) -- were "sold out" for the 2024 and 2025 calendar years.
The decline in Micron's stock price pulled down shares in semiconductor peers like Nvidia, Advanced Micro Devices (NASDAQ:AMD), and Intel (NASDAQ:INTC).
Analysts at JPMorgan said in a note that they are "not feeling any panic" around Micron's results, arguing that Wall Street's "positioning" was "too high."
Yasin Ebrahim contributed to this report.