Micron (MU) stock 'declines' despite surprise earnings... "Abandons in-house production"

▲ Micron (MU) stock decline/AI generated image

Micron Technology Inc. (MU) announced strong earnings that exceeded market expectations. However, its stock price showed a slight decline in pre-market trading. This was influenced by the news that the production method for the next-generation high-bandwidth memory HBM4E, co-designed with NVIDIA Corporation (NVDA), would be shifted to foundry outsourcing.

According to The Crypto Basic, a specialized virtual asset and finance media outlet, on October 1 (local time), Micron's stock closed Wednesday's regular session at $1,065.11 and then traded around $1,061 in Thursday's pre-market, down 0.37%. Although the company reported fiscal Q4 revenue of $54.23 billion and earnings per share (EPS) of $33.42, surpassing Wall Street's estimates of $51.33 billion and $31.72 respectively, the stock showed a subdued reaction. Micron's fiscal 2027 Q1 revenue guidance of approximately $61.5 billion also exceeded market expectations of $57.02 billion.

A change in technical strategy disclosed during the conference call immediately after the earnings announcement drew investors' attention. Chief Technology Officer (CTO) Scott DeBoer stated that the HBM4E product, co-designed with NVIDIA, would adopt an external foundry process instead of Micron's own base die method. This marks a significant technological shift, considering that Micron has adhered to its in-house base die manufacturing method for its next-generation products, including HBM4.

NVIDIA's strategy is to maximize performance and efficiency through the introduction of a new architecture. NVIDIA emphasized that this design method can increase memory bandwidth by up to 30% and reduce power consumption by 15% compared to standard HBM4E. At the same time, it can secure up to an additional 25% computational die area, which is expected to significantly contribute to improving the performance of next-generation artificial intelligence (AI) accelerators.

Similar adjustment trends were observed in the tokenized stock market. According to CoinMarketCap, Micron's tokenized stock (MUB) continued to trade around $1,061.57, down 0.70% from 24 hours prior. Experts predict that while Micron is increasing its closeness with NVIDIA in the AI memory competition, changes in cost ratios due to foundry outsourcing and the securing of process stability will be key variables determining the future direction of the stock price.

[Key Article Summary]

-Micron's stock fell 0.37% in pre-market despite strong Q4 earnings and robust Q1 guidance.

-Decided to adopt a foundry process instead of in-house production for the next-generation HBM4E, co-designed with NVIDIA.

-The new architecture is expected to significantly boost AI accelerator performance by achieving a 30% increase in bandwidth and a 15% reduction in power consumption.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*