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Micron’s shares down 16% despite earnings beat

Friday, December 20, 2024

Today’s headlines

What’s happening: Shares of Micron Technology fell sharply on Thursday, after the company released results for its fiscal first quarter.

What happened: The largest maker of computer-memory chips in the US reported stronger-than-expected earnings for its latest quarter.

Despite robust sales growth, Micron missed elevated expectations and issued a soft forecast.

How were the results: The Boise, Idaho-based company reported high double-digit growth in sales for the quarter ended November 28.

  • Revenues grew by 84% to $8.71 billion but missed consensus estimates of $8.72 billion.
  • Adjusted earnings came in at $1.79 per share, topping Wall Street expectations of $1.76 per share.

Why it matters: Since the end of the pandemic, growth in the market for chips used in computers and smartphones has been decelerating. AI is quickly emerging as the main demand generator for memory chips.

Micron’s datacentre-related revenues surged 400% year-over-year in the quarter, with the division representing over 50% of the company’s overall sales. Meanwhile, Micron’s mobile business division recorded a sequential decline of 19%.

The company projected the PC market to grow by about 5% in 2025, with most of the growth coming in the second half of the year.

“We continue to gain share in the highest margin and strategically important parts of the market and are exceptionally well positioned to leverage AI-driven growth to create substantial value for all stakeholders,” CEO Sanjay Mehrotra said.

Management guided to revenue of $7.9 billion, plus or minus $200 million, for the second quarter, which came in significantly short of market expectations of $9 billion. They also projected adjusted earnings of $1.43 per share, plus or minus 10 cents per share, for the quarter, versus market views of $1.92 per share.

How shares responded: Micron’s shares tanked 16.2% to settle at $87.09 on Thursday, following the release of quarterly results. The stock had lost as much as 17% during the session to record its biggest intraday plunge since March 2020, but recovered slightly before the market closed. The stock has lost around 40% over the past six months.

What to watch: Investors will continue monitoring demand for chips used in smartphones and computers, which is expected to significantly impact the company’s overall results ahead.

The markets today

The Canadian dollar in focus today ahead of a basket of major economic reports

Context: The CAD/USD forex pair fell this morning, as investors assessed the latest economic data.

Details: Data released on Thursday showed average weekly earnings of non-farm payroll employees in Canada rose by 5.3% year-over-year to $1,284.43 in October. This represented an acceleration from the 4.9% gain in the previous month and was the fastest pace since March 2021.

The Bank of Canada is widely expected to continue lowering its benchmark interest rates to combat weak economic growth. Meanwhile, the Canadian government cut its GDP growth projections for 2025 to 1.7%, from the earlier forecast of 1.9%. It also revised its 2026 GDP growth forecast to 2.1%, from 2.2%.

Weakness in price of crude oil, one of Canada’s major exports, also exerted pressure on the loonie. WTI crude oil prices fell around 1% to trade at $69.91 a barrel on Friday.

Some strength in the US dollar weighed further on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged higher to 108.43 this morning.

The CAD/USD forex pair fell around 0.2% to 1.4427 this morning. The S&P/TSX Composite Index declined 0.58% to close at 24,413.94 on Thursday.

What to watch: Investors await the release of economic data on Canada’s retail sales (1730 UAE Time), wholesale sales (1730 UAE Time) and budget balance (2000 UAE Time) today. Analysts expect retail sales in Canada to grow by 0.7% in October, following a 0.4% gain in September.

Wholesale sales in Canada, which rose 1.0% in October, are expected to grow by 0.4% in November. Canada’s government budget deficit, which shrank to C$3.17 billion in September, is projected to widen to C$4.3 billion in October.

Other Markets: European indices closed lower on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 1.14%, 1.35%, 1.22% and 1.51%, respectively.

The news shaping the markets

Ukraine launched ten Western-made missiles at Russia’s Rostov region. The news sent the safe-haven US dollar index higher in forex trading this morning.


Australia’s private sector credit grew by 0.5% in November. This represented a slowdown from the 0.6% gain in the previous month exerted pressure on the AUD/USD forex pair.


The People’s Bank of China kept its key lending rates unchanged for the second consecutive month, which sent the CNY/USD pair lower in forex trading this morning.


UK’s car production dipped 30% year-over-year to 64,216 units in November. With this, the country recorded the weakest monthly output since 1980, which exerted pressure on the GBP/USD forex pair.


New Zealand’s trade deficit shrank to NZ$0.4 billion in November, from NZ$1.2 billion in the year-ago period, sending the NZD/USD pair higher in forex trading this morning.

What else to watch today

Italy’s business confidence (1300 UAE Time), consumer confidence (1300 UAE Time), industrial sales (1400 UAE Time) and PPI (1500 UAE Time), Russia’s interest rate decision (1430 UAE Time), Brazil’s FGV consumer confidence (1500 UAE Time), UK’s CBI distributive trades (1500 UAE Time), India’s monetary policy meeting minutes (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), US personal income (1730 UAE Time), personal spending (1730 UAE Time), PCE price index (1730 UAE Time), Michigan consumer sentiment (1900 UAE Time), Baker Hughes oil rig count  (2200 UAE Time) and Baker Hughes total rigs count (2200 UAE Time), Eurozone’s consumer confidence (1900 UAE Time), as well as Argentina’s current account (2300 UAE Time) and economic activity (2300 UAE Time).


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