Micron shares fell on Friday after rival Sandisk reported strong quarterly results. Sandisk's own stock dropped as well, and the memory chipmakers tend to move together.
Shares of Micron fell as much as 5.9% on Friday morning. At 11:28 a.m. ET, the stock was still down 4.7%.
The trigger was a competitor's bullish report, which did not ease investor concerns about the future of artificial intelligence (AI).
Sandisk beats estimates, then drops
Sandisk reported results for its fiscal 2027 first quarter, which ended Oct. 2. Revenue rose 378% year over year and 23% quarter over quarter to $11 billion. Adjusted earnings per share (EPS) came in at $49.51, more than 40-fold growth.
Analysts had expected revenue of $10.7 billion and adjusted EPS of $46.67. Data center revenue surged 1,682% year over year to $4.8 billion, while edge computing revenue of $5.8 billion jumped 320%.
Sandisk also guided for second-quarter revenue of $12.4 billion and adjusted gross margin of 85%, both at the midpoint of its guidance. Even so, its stock plunged as much as 11% on Friday, dragging other memory chipmakers down with it.
Why Micron followed
The reason for the stalling prices is complex. Sandisk and Micron stocks have gained 488% and 293%, respectively, over the past year on surging demand for memory chips used in AI. After runs of that size, investors are increasingly concerned that the good times can't last, particularly in AI.
Sandisk, Micron and SK Hynix also tend to move together, and that held true on Friday. Micron now trades at 12 times earnings, which the source describes as an attractive entry for investors who believe AI still has room to run.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
