By Aaron McDade

Micron's latest results and outlook blew past Wall Street's forecasts. So why is the stock pulling back?

Shares of Micron Technology (MU) were down about 4% in recent trading, a day after the memory chipmaker reported fiscal second-quarter results that exceeded analysts' expectations thanks to booming AI demand and higher prices.

Micron posted adjusted earnings of $12.20 per share on revenue that nearly tripled year-over-year to $23.86 billion. Analysts had called for adjusted EPS of $9.25 on revenue of $19.87 billion, according to Visible Alpha.  For the third quarter, Micron projected $32.75 billion to $34.25 billion in sales and adjusted EPS of $18.75 to $19.55, well above analysts' projections.

William Blair, Citi and Wedbush analysts suggested following the report that the market's muted reaction could point to worries about the sustainability of Micron's torrid gains in recent months. The stock has more than quadrupled in value over the past year and closed at a record high Wednesday ahead of the results.

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Morgan Stanley analysts said Thursday that while recent conversations with investors indicated positive sentiment surrounding near-term results for memory chipmakers such as Micron, they revealed "very low conviction about the durability of that strength," amid some worries that memory prices could soon peak as companies work to boost production.

A shortage of memory components driven by demand for the hardware used in AI data centers has led to a surge in prices in recent months, boosting sales for Micron and memory rivals, even as they invest in increasing their production capacity. Micron said Wednesday it now plans to spend at least $25 billion in capital expenditures this year, up from $20 billion previously.

Even with Thursday's drop, Micron shares have more than quadrupled in value in the last 12 months.

Source: Investopedia