Memory chipmaker Micron Technology Inc. delivered fiscal fourth-quarter results today that surpassed Walll Street’s expectations, but its forecast for its first quarter came up light, sending its stock lower in extended trading.

During the quarter just gone, Micron said it racked up a net loss of $1.43 billion. It reported a loss before certain costs such as stock compensation of $1.07 per share, ahead of the Street’s forecast for a loss of $1.15 per share. Revenue declined 39%, to $4.01 billion, but came in ahead of the $3.95 billion estimate.

Looking to the current quarter – the first quarter of Micron’s fiscal 2024 – the company said it’s looking at a loss of between $1 and $1.14 per share on sales of $4.2 billion to $4.6 billion. Unfortunately, Wall Street was hoping for a much better bottom-line performance, forecasting a loss of just 88 cents per share on revenue of $4.24 billion.

The weak forecast hit Micron’s stock in the after-hours period, and it was down more than 3%, erasing a slight gain during the regular session.

Micron Chief Executive Sanjay Mehrotra (pictured) said in a statement that the company took decisive actions on supply and costs during a “challenging environment” in the fiscal 2023 period. “Our performance positions us well as a market recovery takes shape in 2024, driven by increasing demand and disciplined supply,” he added. “We look forward to record industry revenue in 2025 as AI proliferates from the data center to the edge.”

Micron is a key player in the memory chip market. It’s a leading manufacturer of both dynamic random-access memory, which is used in personal computers and data center servers, and also NAND flash, which goes into smaller devices such as smartphones and USB drives. The company, which experienced a boom time during the days of the COVID pandemic, has been hit hard in more recent months by a struggling global economy.

That explains a disappointing full-year performance. In fiscal 2023 its total revenue came to $15.5 billion, down 49% from fiscal 2022. The company reported a total loss of $4.45 per share, compared with a profit of $7.75 per share in the prior year.

Micron’s problem in fiscal 2023 was weak demand for both DRAM and NAND memory chips in its core markets – PCs, data centers and mobile devices. The company had previously forecast that demand for DRAM would grow in the low to mid-single digits, while NAND would grow in the high single digits, and that forecast turned out to be somewhat optimistic.

On the other hand, Mehrotra said during the company’s previous earnings report three months ago that the market for DRAM looked to have bottomed out. That came as the company snapped a four-quarter streak during which it missed Wall Street’s earnings and revenue targets. Six months ago, just before it snapped that streak, it recorded its biggest quarterly loss on record after writing off more than $1.4 billion worth of inventory.

The company believes that things will get better in fiscal 2024, driven by the growing interest in artificial intelligence. In a conference call, Mehrotra told analysts that AI servers use significantly more DRAM and NAND chips than traditional data center servers. He said AI servers have “greater technology complexity, robust product value and higher profitability.”

Micron admitted, however, that traditional server demand remains somewhat lackluster. That’s because most customers are readjusting their budgets so they can buy more AI servers than traditional ones. “Total server unit shipments are expected to decline in calendar 2023 – the first year-over-year decline since 2016,” the company said. “We expect total server unit growth will resume in calendar 2024 to help fulfill ever-increasing workload demand.”

Charles King of Pund-IT Inc. told SiliconANGLE that Micron did well to beat the Street’s expectations, and said the lower guidance, while disappointing to some investors, is entirely sensible. “The caution shows that Micron clearly understands the cyclical nature of memory technology and its market evolution,” King said. “The AI servers are an opportunity, but it is one where the potential remains unclear for now. Investors and other parties should be glad that this will get sorted out, but it won’t happen in short order.”

Despite today’s decline, Micron’s stock is up more than 36% in the year to date, just ahead of the average 32.3% gain by the PHLX Semiconductor Index and well ahead of the 25.1% gain in the Nasdaq Composite.

Photo: SiliconANGLE