Micron slumps after CFO’s margin warning raises alarm about its AI data center business

Shares of Micron are tumbling after CFO Mark Murphy declined to provide fresh guidance for the chipmaker’s next earnings report, but warned that margins would be squeezed thereafter.

“We have no change to or no update” to the outlook previously provided for fiscal second-quarter results slated to be released next month, Murphy said at a Wolfe Research conference this morning. “We now see fiscal third-quarter gross margins to be lower by a few hundred basis points sequentially.”

Current consensus estimates show adjusted gross margins were expected to be down only modestly from fiscal Q2 to Q3, so those might be due for some negative revisions. But what that margin pressure says about the performance of its underlying business units may be more concerning.

The CFO’s remarks point to “a heavier consumer mix that suggests healthier smartphone demand but sluggish data-center solid-state drives,” Bloomberg Intelligence technology analyst Jake Silverman wrote. Solid-state drives (or SSDs) are used for data storage.

Micron is one of the worst performers in the VanEck Semiconductor ETF, which is having a rough session along with the broader market after the January CPI inflation report surprised to the upside.

But for the March 20 earnings report, the lack of an update may not be too much of an issue. The range of guidance was already loosely aligned with consensus estimates. Cynically, one could argue that opting against massaging those numbers higher now will make it easier to engineer a nice post-earnings bump when the company reports on March 20.