Micron Technology (MU) shares plunged 5% in Friday's pre-market trading, reversing initial gains following the company's better-than-expected quarterly earnings report. The memory chip maker's conservative gross margin forecast and broader market weakness overshadowed its strong performance in artificial intelligence (AI) related products.

Micron reported fiscal second-quarter revenue and earnings that surpassed Wall Street estimates, driven by robust demand for its high-bandwidth memory (HBM) chips used in AI applications. The company's HBM revenue grew more than 50% sequentially to over $1 billion, marking a significant milestone. However, Micron's outlook for third-quarter gross margins of 36.5% fell short of analysts' expectations of 36.9%, according to LSEG data.

Despite the stock's decline, several analysts remain optimistic about Micron's long-term prospects in the AI market. Wedbush analyst Matt Bryson raised his price target on Micron to $130 from $125, citing the company's technology leadership in HBM and the potential for sustained growth. UBS analyst Timothy Arcuri maintained a Buy rating, noting that Micron's focus on HBM could lead to more stable supply-demand dynamics in the DRAM market.

The sell-off in Micron's shares appears to be part of a broader market decline, with futures for major U.S. stock indexes pointing lower amid ongoing concerns about U.S. trade policies and economic uncertainty. As investors navigate this complex landscape, Micron's ability to capitalize on AI-driven demand while managing potential headwinds in traditional memory markets will be crucial for its future performance.