(Bloomberg) -- Micron Technology Inc., the largest US maker of computer memory semiconductors, suffered its worst stock decline in two months after warning that it’s spending more than expected on operations.
Adjusted operating expenses will be $990 million in the fiscal first quarter, the Boise, Idaho-based company said on Tuesday. The previous forecast was roughly $900 million. Though Micron increased its revenue outlook to $4.7 billion in the period, up from $4.6 billion, investors had been anticipating a more significant revision.
The stock fell as much as 4.6% in New York, the most since Sept. 28. It had been up 55% this year through Monday’s close, bolstered by optimism that the chip industry is bouncing back from a slowdown.
Investors have been looking for signs that improving demand for smartphones and personal computers will give chipmakers like Micron a boost. A recovery in semiconductor prices has been a hopeful sign, according to Wolfe Research analyst Chris Caso, but expectations may have gotten ahead of reality.
“We believe the stock is down due to rising expectations given increasing pricing trends heading into year-end,” he wrote in a research note.
Chief Executive Officer Sanjay Mehrotra told the audience at the UBS Global Mobility Technology Conference that while expenses in the quarter were significantly higher than he had predicted — due to some research and development expenses — they will fall in the quarter ending in February. Micron remains bullish on the outlook for pricing, and a return to profitability is approaching quicker than thought, Mehrotra said.
“We have said that for a while that 2025 we believe will be a record year for the industry,” Micron’s leader said. “2024 will be the year of recovery.”
Micron is slated to release its official first quarter results on Dec. 20.
(Updates with analyst and CEO comments starting in fourth paragraph.)
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