Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
Micron's case rests on memory becoming less cyclical through industry consolidation, a thesis that remains intact. Mohnish Pabrai sold Micron at $64 in 2023 although nothing about that thesis had changed, missing a 15-bagger. Fact-based convictions are worth holding through sentiment swings, though memory's cycle could run longer than expected and the thesis could still prove wrong. x.com x.comÂ
Micron will be hit brutally when the memory cycle wanes and should get cut in half at least, though the timing and the starting level are unknown. Chips are the most cyclical industry and memory arguably the most cyclical within them, still largely commoditized despite claims that this time is different. The weak earnings reaction is no surprise: as with Nvidia lately, too much is never enough. Memory stocks are a buy at their lows, not now. x.comÂ
Micron's memory leadership remains intact because it is sold out into 2027. A red day does not change those fundamentals; anyone arguing it has topped must identify which part of demand breaks and when. x.comÂ
Micron looks like the next memory name to break out, with buyers still defending the $1,035 level despite a muted earnings reaction. The numbers and forward growth were great, and similar choppy consolidations in Marvell, Super Micro, NetApp, Palantir and HPE have kept their uptrends working. SK hynix is also looking to break out. x.comÂ
Micron is too risky to own long term because memory is one of the most cyclical parts of the AI trade. Its margins are hard to forecast, so memory, like neoclouds, deserves a low multiple until it proves it can run a sustainable business through cycles, despite immense upside. Micron belongs in the too-hard pile: worth swing trading at opportune times, not holding long term or in real size. x.com x.comÂ
Micron's record quarter matters less than the memory cycle, which looks long. It is best held as a two-clock position: quarterly economics running hot now, and a multi-year cycle measured in years, with confusion coming from reading one as the other. Per Micron's CEO, as @ParadisLabs relays, humanoid robots carry 10x the memory of an L2+ vehicle, and a sustained multi-decade memory demand cycle should begin late this decade. x.com x.comÂ
Micron can't meet customer demand, giving it rare visibility at a valuation of about 5x next year's earnings. CEO Sanjay Mehrotra said customers are extending agreements into 2031, which gives certainty of demand and lets Micron plan capacity investments with confidence. The stock is now about $1,000, and with potential EPS beats over the next few quarters its forward P/E could be around 5, unthinkable about six months ago. x.com x.comÂ
Micron faces a severe crash risk from CXMT's current threat and apparent investor complacency after a euphoric high. If the Wall St Cheat Sheet fits, most of Micron's gains across 40 years, amassed in just one year, could be erased soon. Earlier, Elon Musk said Micron had been reasonable on future memory prices; memory stocks were not yet to be faded. x.com x.comÂ
Micron's sold-out high-bandwidth memory through 2027+ and contracts already being signed for 2029-2030+ extend its earnings runway. At 5x forward earnings, it is cheaper than a year ago; its private Anthropic stake is about to be instantly rerated at Anthropic's IPO, and a new share buyback is expected to be announced Dec. 9. Micron could certainly gain 30% in three months. x.com x.comÂ
Micron can still benefit from rising memory prices because 70% remains open to pricing. Those prices have been rocketing, countering LogicalThesis's claim that long-term agreements lock away the upside. x.comÂ
Micron's upside is now capped while its downside remains, because its long-term agreements will be meaningless if the memory cycle turns. In hard times, even bona fide take-or-pay contracts get challenged through material adverse change clauses, so the agreements offer little protection. Memory's shareholder base is also turning over from fast money chasing pricing and revisions to growth-at-a-reasonable-price investors, who do not believe the earnings are sustainable. x.com x.comÂ
Micron looks very cheap because the market underestimates how sustainable its earnings will be over the next few years. x.comÂ
