Micron Technology Plunges 5.85% on Trump's Tariff Announcement

On April 4, 2025, Micron Technology's stock experienced a significant drop of 5.85% in pre-market trading, reflecting a sharp decline in investor sentiment.

The primary catalyst for this decline was the announcement by President Trump of "reciprocal tariffs" on all US imports, set at a minimum rate of 10%. This move particularly impacted companies with heavy exposure to Asia, including Micron Technology, which relies on global supply chains for its operations. The new tariffs threatened the growth and profits of firms with factories in regions like Vietnam, Cambodia, and Indonesia, where tariff rates were set at 46%, 49%, and 32% respectively. These measures could significantly erode the competitiveness of goods produced in those regions, negatively affecting the sales growth of companies benefiting from these manufacturing hubs.

Micron's stock has been volatile, with 24 moves greater than 5% over the last year. The recent drop was particularly significant, indicating that the news had a substantial impact on the market's perception of the business. The previous big move occurred 13 days ago when the company reported its first-quarter (fiscal Q2 2025) results. While the overall performance was decent, softness in key markets, weaker margins, and inventory concerns overshadowed the positives. Inventory levels saw a material increase, partly due to weakness in the automotive and mobile segments. Additionally, declining NAND prices put pressure on margins, resulting in a significant sequential drop in profits. The DRAM business continued to show strong year-over-year growth but sequential sales declined, raising questions about the sustainability of demand for memory devices used in AI computing platforms.

Despite exceeding analysts' expectations on both revenue and EPS, and providing guidance for the next quarter that came in ahead of Wall Street forecasts, management flagged concerns about NAND oversupply and pricing pressures. These factors could weigh on future margins and revenue, contributing to the mixed outlook for the company. Overall, the recent developments highlight the challenges Micron Technology faces in navigating the current economic and trade environment.