Micron Stock (MU) 8% Down on Lower Chip Margins, While Nasdaq and Tech Stocks Climb

Chipmaker Faces Margin Pressures as AI Demand Grows

Micron Technology (NASDAQ: MU), the largest US manufacturer of computer memory chips, saw its stock fall by nearly 8% on Friday despite reporting better-than-expected earnings for the second quarter of fiscal 2025. The decline was driven by margin concerns, as the company warned that profitability would be lower than expected in the coming months.

Micron’s gross margin for Q2 came in at 37.9%, slightly below analysts’ expectations of 38.4%, according to Bloomberg. Additionally, the company provided a weaker-than-expected outlook for the current quarter, forecasting a gross margin of approximately 36.5%, further disappointing investors. This marks the first decline in Micron’s margins since the industry-wide oversupply in 2023, raising concerns about pricing pressures in the memory chip market.

Micron Stock Reaction and Market Impact

Ahead of the earnings release, Micron shares were trading above $102 and initially surged after the strong revenue numbers. However, the rally was short-lived, and the stock reversed sharply, opening with a bearish gap on Friday and sinking to $94 during the session.

Micron’s traditional markets, such as smartphones and PCs, have remained weak, limiting growth in these segments. However, the company is seeing surging demand for AI-related chips, which are used in data center hardware that powers artificial intelligence applications.

Earnings Performance and Industry Trends

Despite concerns over margins, Micron posted strong top-line growth. The company reported a 38% year-over-year increase in revenue, reaching $8.05 billion, surpassing analysts’ expectations of $7.91 billion. Earnings per share (EPS) stood at $1.56, beating the forecast of $1.43.

Micron remains well-positioned in the AI-driven data center market, but investors will be closely watching whether the company can manage pricing challenges and sustain profit growth in the coming quarters. The broader semiconductor sector also saw declines on Friday, as Micron’s results sparked concerns about future chip pricing and demand fluctuations.