(Reuters) – Shares of Micron Technology plunged 15% in premarket trading on Thursday after a gloomy forecast signaled a decline due to weak demand for PCs and smartphones, overshadowing a solid rise in AI chip sales. The market for dynamic random access memory (DRAM) chips, the company’s biggest revenue generator, has remained under pressure since the end of the pandemic due to an ongoing supply glut.

Analysts at Morgan Stanley said the DRAM market appears to be unhealthy and slowly deteriorating, with the biggest weakness being in older technologies, which typically indicates oversupply.

Micron expects smartphones to grow in the low single-digit percentage range in 2025. Global PC shipments fell 1.3% to 62.9 million units in the third quarter, according to market research firm Gartner.

Meanwhile, sales of the company’s high-bandwidth memory (HBM) chips, a type of DRAM chip used to power advanced AI systems, more than doubled sequentially.

“Micron’s HBM story remains intact as the company has positioned itself to benefit from market expansion opportunities through data center investments in 2025,” said analysts at Piper Sandler.

The Boise, Idaho-based company is just one of three HBM chip suppliers, along with SK Hynix and South Korea’s Samsung.

Demand for HBM chips has helped Micron shares rise about 22% so far this year, and analysts expect it to continue to be a key driver.

According to LSEG, at least six brokers lowered their price targets on the stock following the results. Micron’s 12-month price-to-earnings ratio is 10.67, lower than Qualcomm’s 13.4 and Advanced Micro Devices’ 23.97.

(Reporting by Joel Jose in Bengaluru; Editing by Sriraj Kalluvila)