Micron Technology, Inc. (NASDAQ:MU) experienced a pullback in premarket trading on Friday, following a historic rally that saw the stock surge 15.7% in the previous session. The shares traded at $1,151.93 before the opening bell, representing a 5.4% decline from Thursday's close of $1,213.56. This move came as the broader Nasdaq 100 futures slipped 1.25%, reflecting a cautious tone across technology markets.
At the premarket price, Micron shares were trading at approximately 9.3 times the company's annualized non-GAAP earnings per share guidance of $31 for the fiscal fourth quarter. Even after the rally, the forward earnings multiple remains low for a trillion-dollar semiconductor firm, unless the current quarter marks the peak of the memory chip cycle.
The company reported robust fiscal third-quarter results, with revenue surging to $41.46 billion from $9.30 billion a year earlier. Non-GAAP earnings per share came in at $25.11. For the fiscal fourth quarter, Micron guided revenue of $50.0 billion, plus or minus $1.0 billion, and a gross margin near 86%. The stock's record single-day gain on Thursday added approximately $186 billion to Micron's market capitalization.
Investors are closely scrutinizing the terms of Micron's strategic customer agreements. The company has 16 such deals covering roughly 20% of DRAM volume and about one-third of NAND volume, with a total remaining performance obligation of approximately $100 billion. However, many of these contracts include both floor and ceiling price provisions. While floor prices provide downside protection if the memory cycle turns down, ceiling prices could limit upside if spot prices continue to rise.
Chief Financial Officer Mark Murphy cautioned that the $100 billion backlog figure is "not indicative" of total future revenue, and noted that customer deposits "will not affect our free cash flow." Micron generated $18.3 billion in adjusted free cash flow during the fiscal third quarter after net capital spending of $7.1 billion. CEO Sanjay Mehrotra stated that the company still does not "have line of sight" on when memory supply will balance with demand.
Analyst opinions remain divided. BNP Paribas analyst Karl Ackerman described the earnings report as "historic" and expressed increased confidence that the industry will remain undersupplied through the next calendar year. Conversely, Bernstein's Mark Newman raised concerns about the contract ceilings, questioning whether they "suggest limited headroom" for further gains. The average price target for Micron stood at $1,526.67, roughly 33% above the premarket price, with a low target of $1,100.
The broader market context also weighed on sentiment. Apple Inc. (NASDAQ:AAPL) fell in the previous session after raising prices on some products, citing higher memory and storage chip costs. BMO Family Office CIO Carol Schleif summed up the risk, noting that "it's coming out of somebody else's hide."
