Investing.com – Micron surged on Thursday, helping semiconductor stocks add to their swashbuckling gains so far this year after the chipmaker reported earnings that beat estimates.
Micron Technology (NASDAQ:MU) reported fiscal second-quarter earnings of $1.71 a share, beating the earnings consensus from Investing.com of $1.66. But revenue of $5.84 billion just missed expectations for $5.86 billion.
“Taking everything into account, February numbers were essentially in line with our estimates and the Street as fears of a large top and bottom line miss resulting from weaker than expected memory pricing did not materialize,” Morgan Stanley (NYSE:MS) equity analysts said in a note.
The fall in prices has been attributed to falling demand for memory chips at various levels. Smartphone shipments have waned, and server shipments have stalled. The end of the cryptocraze has seen demand for GPUs fall, leaving graphics chip makers like Nvidia Corporation (NASDAQ:NVDA) in a cold sweat.
In the conference call that followed the results, Micron’s management vowed to slash output of DRAM and NAND flash memory to offset falling demand.
“Given the lower DRAM demand outlook from our customers, we have decided to idle approximately 5% of our DRAM wafer starts,” said Chief Executive Sanjay Mehrota, according to a transcript of the call. “We are reducing our total NAND wafer starts by approximately 5%, mostly through reductions on our legacy nodes.”
The “controversial” move to cut output signals that the excess memory inventory woes are likely to continue through the year, Morgan Stanley said. “The inventory trends bring into sharp relief just how large the gap is between supply and demand.”
Micron earnings triggered a sea of green across semis, as Qorvo (NASDAQ:QRVO), Western Digital (NASDAQ:WDC) and Skyworks Solutions (NASDAQ:SWKS) were up sharply, helping the Philadelphia Semiconductor Index add 3.4% on the day, boosting its year-to-date gains to nearly 25%.