Lately, artificial intelligence (AI) has been all the rage on Wall Street. Proponents of the new technology believe that it will change the world, taking menial tasks off the to-do lists of millions of workers and freeing them up to do more productive work.
Yet even the promise of AI doesn't necessarily guarantee success for every company working with the new technology. On Thursday morning, shares of Micron Technology (MU +5.00%) and Accenture (ACN 2.69%) were both lower, even though both companies have exposure to the AI trend. Here's why Micron and Accenture are running into trouble and what it means for those who believe that artificial intelligence is what will inevitably send the entire stock market higher.
Micron is still dealing with a big plunge in demand
Shares of Micron Technology fell 4% early Thursday. The memory chip company continued to lose money and report much weaker sales in its fiscal fourth-quarter results for the period ended Aug. 31.
Micron reported $4.01 billion in sales for the period, which was down almost 40% year over year. Adjusted losses amounted to $1.18 billion, or $1.07 per share. That closed a fiscal year in which Micron saw revenue get cut nearly in half and reported adjusted losses of $4.86 billion.
NASDAQ: MU
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Yet Micron CEO Sanjay Mehrotra tried to position Micron as having made progress in building up its leadership role during a challenging period for the semiconductor industry. The CEO expects that demand will start to recover in fiscal 2024, and moreover, Mehrotra expects that by 2025, AI will start to play a more meaningful role in the company's total addressable market.
Even prospects of building a strong relationship with AI giant Nvidia in producing high-bandwidth memory chips for AI applications weren't enough to give shareholders the confidence they needed looking forward. Micron is hopeful that by waiting until it can generate high-performing products, it will be able to pass up rivals that simply brought their best available technology to the table more quickly. Even so, that strategy could test the patience of Micron's shareholders.
Accenture is slow to see AI adoption
In the IT consulting world, Accenture shares were down more than 5%. The company managed to post modest gains in sales and profits in the fiscal fourth quarter that ended Aug. 31, but some investors aren't happy with the tentative nature of its clients' adoption of generative AI.
Accenture's numbers were reasonably solid. Revenue was up 4% year over year to $15.99 billion, which was slightly less than those following the IT consulting stock had expected. Yet adjusted earnings of $2.71 per share topped expectations.
NYSE: ACN
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Accenture was successful in continuing to reap the rewards of its clients' digital transformation efforts. The company closed its fiscal year with $72 billion in total bookings, showing the overall demand for its consulting services. Yet those who wanted to see Accenture take greater advantage of opportunities in artificial intelligence were largely disappointed, as the company reported just $300 million in bookings from generative AI in the last six months.
Investors also didn't like Accenture's call for flat sales in fiscal 2024, citing evidence of a further slowdown in IT spending activity. With many shareholders having wanted to see AI have a more positive influence, Accenture's comments seemed to question whether artificial intelligence would be the saving grace for the broader tech industry.
