Micron Technology shares fell 8% on Mar. 21 after the company projected a lower-than-expected adjusted gross margin of 36.5% for the third quarter, below analysts’ estimate of 36.9%.

This overshadowed its strong revenue outlook, driven by demand for semiconductors used in AI.

The company cited oversupply and declining prices for consumer memory chips as key factors affecting profitability.

Oversupply in NAND Flash memory continues to impact margins, with weak demand and pandemic-era overstocking leading to lower pricing.

Micron has cut production, resulting in underutilization and further margin pressure. Despite this, strong AI-related memory chip demand, especially high-bandwidth memory (HBM) for GPU makers like Nvidia, is expected to drive growth.

Micron shares remain up over 13% year-to-date, despite a 1.4% decline in 2024. Investors are optimistic about improving market conditions and Micron’s role in the AI supply chain.

Recent Micron developments