Edgewater Research predicts weak storage demand in 2025, causing Micron Technology, Inc. (MU.US) and Western Digital Corporation (WDC.US) to decline in response.

Edgewater Research has lowered its price forecast for NAND and DRAM. In response to this news, Micron Technology, Inc. (MU.US) fell about 4% on Tuesday, while Western Digital Corporation (WDC.US) fell about 5%. Analysts at Edgewater Research believe that the demand forecast for NAND from Original Equipment Manufacturers (OEM) and Cloud Service Providers (CSP) continues to shrink. At the same time, the NAND demand for data centers is expected to remain soft in 2025, with only a slight increase year over year. The analysts stated that suppliers are urging customers to sign long-term agreements for 2025 and in some cases are raising demand forecasts in those long-term agreements for 2025. Suppliers also noted that they are willing to support any or all demand for 2025. Furthermore, concerns about shortages of High Bandwidth Memory (HBM) and Enterprise Solid State Drives (eSSD) seem to have largely disappeared. The analysts added that price forecasts for all sectors have been lowered again, including Personal Computers (PCs), mobile devices, and servers, as well as NAND and DRAM. The rebalancing target for PC and mobile device OEMs is still expected to be achieved in the second quarter of 2025, with orders matching actual demand growth in the second quarter or latter half of 2025. The analysts stated that there is a disconnect between forecasts of limited supply growth and supply tightness in 2025 and the industry reality (at least a potential oversupply and price pressure until at least the first half of 2025). Forecasts for pricing and demand in 2025 are becoming more cautious. The analysts anticipate that feedback over the coming months will be highly volatile depending on enterprise demand, Samsung Electronics' success with HBM and/or shift to standard DRAM, and speculation about reduced NAND utilization. The analysts have a mixed short-term view on Micron Technology, Inc., but are positive about its long-term prospects. They added that industry feedback is becoming more cautious, weakening their optimistic outlook for the first half of 2025 for Micron Technology, Inc. The analysts stated that there are still some unique catalysts for the company that can drive its performance ahead of the market, including stock price increases for HBM and eSSD. The analysts noted that feedback on Micron Technology, Inc.'s relative position in these markets continues to improve, and they expect average selling prices and profit margins to increase over the next two to three quarters. Additionally, in the long term, the analysts still believe that Micron Technology, Inc. is in a more advantageous position in terms of technological transformation, product portfolio (eSSD, HBM), and cost structure/ balance sheet.