Investors have shown confidence in Micron Technology (NASDAQ:MU) stock this year. Micron stock has shot up more than 55% in 2019, as of this writing, as Wall Street is rooting for a second-half recovery in memory demand and a subsequent increase in prices.

Investors will get a better look at how things are going on Sept. 26 when Micron releases its fiscal fourth-quarter report. The company needs to show concrete signs that the memory market is turning around to keep investor enthusiasm.

Frustrated man in front of a chart showing a stock crash.

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Micron's financial performance will be far from ideal

Micron Technology's top and bottom lines have been sliding big time thanks to oversupply in the memory industry. Its revenue was down nearly 39% year over year during the fiscal third quarter. Adjusted gross margin fell more than 21 percentage points and earnings per share dropped 66% annually to $1.05 per share.

A similar story is expected to unfold when Micron releases its fourth-quarter earnings. The top line is expected to crash 46% to $4.54 billion, while analysts think earnings per share could shrink to just $0.47 per share as compared to $3.53 per share in the year-ago period. Those numbers are almost in line with Micron's guidance, which calls for $4.5 billion in revenue and $0.45 in earnings per share at the midpoint of its guidance range.

Micron investors shouldn't expect the company to spring a surprise as memory market conditions aren't improving. According to DRAMeXchange, second-quarter 2019 DRAM (dynamic random access memory) revenue was down 9% sequentially. What's more, third-quarter price trends show that quotes for DRAM chips kept sliding thanks to weak end-market demand.

DRAMeXchange also reports that Micron has lost market share to SK Hynix and Samsung on account of the U.S.-China trade war. The chipmaker's second-quarter DRAM market share fell to 20.5% from 23% in the first quarter of the calendar year.

So there's a chance that Micron's quarterly results might not satisfy consensus estimates.

Prepare for a weak outlook

The chipmaker's guidance might also disappoint investors. Consensus estimates suggest that Micron's first-quarter fiscal 2020 revenue will be $4.72 billion. That would be a 40% drop over the $7.91 billion in revenue the company achieved in the prior-year period. Earnings per share are expected to drop from $2.97 per share to $0.44 per share.

The only way Micron could better these estimates is if prices start trending up, but that looks like a long shot considering the end-market conditions.

Smartphone shipments are expected to drop 2.5% this year, according to Gartner, and the market is expected to rebound only in the second half of 2020 thanks to the ramp-up of 5G smartphones.

The PC market won't bring any relief for Micron either, as shipments are expected to contract not only in 2019, but all the way through 2023.

And finally, the server market has continued to decline in recent quarters, as IDC data shows. Server shipments in the first quarter of 2019 were down 5.1% year over year. Alarmingly, the decline accelerated in the second quarter as server shipments fell 9.3% year over year.

If these trends continue in the latter half of the year, memory prices could weaken further and dent any chances of a comeback at Micron. So Micron investors should remain cautious going into the company's quarterly report as gloomy end-market conditions could lead to a weak outlook.