Options selling with Christian
Growth Investor, Options Selling, Creator of Stock Catalysts
Memory stocks look set to fall as the memory trade comes under pressure; these companies got too much pricing power too quickly, and the market overall would benefit if the trade blew up. A major analyst turned bearish on memory over the weekend, and a headline says Apple is buying memory from China's CXMT. Even if, as @JMarketMogul notes, Apple is testing for supply rather than cheaper chips, that adds pressure to Micron, SanDisk and SK hynix. x.com x.com
Rising memory contract prices strengthen the case for memory stocks still far below their highs. JPMorgan forecasts Q4 DRAM prices up 13% and NAND up 18%; Micron is 28% below its 52-week high, Seagate 44%, Sandisk 47% and Western Digital 55%. x.com
Apple stock remains unattractive as memory costs threaten demand and supply. Nikkei reports memory-driven iPhone price hikes dampened demand, with October Pro and Pro Max component orders cut at least 15%; Chinese media instead cite a slight Pro dip and Pro Max rise. Apple may still lack long-term memory supply deals, according to market chatter; Korean analysts expect sharp NAND and DRAM price hikes for Apple early next year. x.com x.com x.com x.com
Memory makers face an inventory overhang because upcycle shipments moved stock to module makers, distributors and customers rather than clearing it. That transfer showed up in reported earnings. Prices have plunged since the October holiday; once expectations of further increases disappear and demand sentiment softens, high-priced inventory will surface and selling will be much faster than the earlier restocking. x.com x.com
Memory-cost pressure, weak volumes and weak services should make Apple's quarter bad, giving the short a chance to work on this quarter alone. Other hardware companies this quarter also point to weakness, though Apple has been a terrible short so far. x.com x.com
Micron, Samsung Electronics and SK hynix look very cheap if their long-term agreements do not impose overly conservative price ceilings. Greater clarity on those pricing terms could send memory stocks up 30% in a single day. x.com
China's domestic market lets YMTC and CXMT threaten Micron, Samsung Electronics and SK hynix without entering US products. China receives 15-25% of smartphones and PCs and is on a path to at least 20-30% memory share over the next several years; current leaders are much too optimistic. History suggests at least a near-term semiconductor rally even if the AI trade has topped. It likely has not: agentic AI should give the trade room to run into 2027. x.com x.com x.com
Micron's surging memory revenue points to a supercycle. Its segment and NAND revenue charts show a sharp recent acceleration, while the stock tests its rising 30-week average. x.com
Trump is not going to let Chinese memory chips become serious competitors in the US and West. That makes dips on news out of China a buying opportunity for memory stocks. DRAM fell about 10% in five days, SK hynix over 10% in Korea, Samsung about 7%, and Micron around 5%. RetiringAt54 says CXMT has never mass-produced HBM; this sell-off looks crazy. x.com x.com
The memory sector is finished because China's CXMT has advanced a 4F² DRAM architecture that could greatly increase density. Micron, SanDisk and other memory-stock holders will bleed for months; China will lead AI moving forward, and those stocks are already paying the price. x.com
Memory stocks should work higher over time if they hit their numbers, after Micron put up a massive quarter and guidance. In the short term, market volatility or a post-earnings pullback could take over. The view covers Micron, SanDisk, Western Digital and Seagate. x.com