Investing.com – Micron stock (NASDAQ:MU) fell 3% in Wednesday’s premarket trading as the company’s guidance for the first quarter of the ongoing financial year came in below expectations.
The company sees its revenue in the current quarter at $7.65 billion at center of the guidance range, up 49% from a year ago. Diluted earnings per share are seen at $2 at midpoint of the range, compared to 43 cents in the first quarter of the last financial year.
The message that traders picked up from the company’s fourth-quarter commentary is that demand for chips, particularly DRAM, may have peaked or that it may be around flat. Even so, Micron President and CEO Sanjay Mehrotra called the demand outlook for 2022 strong.
Dynamic random access memory chips, which go into both personal computers and servers, accounted for 72% of the company’s FY21 revenue.
Unprecedented demand for chips in a world that had to suddenly pivot to work-from-home during the pandemic allowed companies like Micron to charge their clients higher prices. This was reflected in gross margins that expanded by 1300 basis points from a year ago to 47.9% in the fourth quarter. One basis point is one-hundredth of a percent.
The market expectation for a better outlook was built up on assumptions that supply chains are still stretched. That elevated demand helped the company clock 37% growth in quarterly revenue to $8.27 billion. Adjusted EPS was $2.42. Both revenue and EPS beat estimates.