Micron Cuts Costs And Jobs, Traders Sell Chip Stocks

Key Insights

• Micron stock is under strong pressure after the disappointing quarterly report. 
• The company is forced to cut costs and reduce its headcount as demand remains weak. 
• Traders sold tech stocks amid worries about the challenging situation in the chip industry. 

Micron Will Reduce Its Headcount By 10%

Micron stock was down by 5% after the disappointing earnings report, which put significant pressure on the whole tech stock segment.

The company reported revenue of $4.09 billion and an adjusted loss of $0.04 per share, missing analyst estimates on both earnings and revenue. In the same period last year, Micron recorded revenue of $7.69 billion. The company noted that revenue was under pressure due to weaker demand and steep decline in pricing.

Micron will be forced to cut costs due to the challenging situation in the industry. The company has already announced that it would cut 10% of its workforce.

In the next fiscal quarter, Micron expects to report revenue of $3.6 billion – $4.0 billion and an adjusted loss of $0.52 – $0.72 per share. The company commented: “Due to the significant supply demand mismatch entering calendar 2023, we expect that profitability will remain challenged throughout 2023.”

 Tech Stocks Dive After Micron’s Results

Micron’s report hurt market sentiment in the tech space, and leading chip stocks have found themselves under significant pressure.

NVIDIA was down by more than 8% in today’s trading session, while AMD lost 7%.  Lam Research and QUALCOMM were also under strong pressure.

Traders were surprised by the weakness of Micron’s results and its disappointing forecast for the upcoming months. The sell-off in the chip-related stocks was strong, and it looks that traders were not prepared for the news.

For the broader market, Micron’s results served as a reminder about the significant challenges faced by the global economy.

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