Colin Tedards
Founder of The Investor Channel & Equity Empire
Micron is a loser from the AI-lab drama because it needed AI training runs to stay hot. Elon Musk, Dario Amodei and Sam Altman have pivoted to messaging that AI could kill you, and with AI already polling badly, that could make it very hard for AI to keep attracting the investment dollars it was getting. If the money dries up, a slowdown in frontier training would undercut that demand. x.com
Micron's 5x earnings multiple reflects an AI bubble that will eventually implode, though not today or next week. Many are already saying AI tokens are not delivering the desired return on investment, and what works for some will not work for all. x.com x.com
Semiconductors could stay undersupplied for a long time as more capable AI per dollar creates more uses and drives compute demand. Micron and NVIDIA trade at low forward P/Es because investors fear peak cyclical earnings, yet current earnings show no slowdown. Shortages may worsen as AI adoption spreads, though the industry could remain cyclical; a reversal of the forced rollover trade is hoped for, not assured. x.com x.com x.com
Micron's ordinary memory could see tighter supply because HBM consumes far more factory capacity than conventional DRAM. Meeting AI demand could thus extend Micron's opportunity beyond AI memory. x.com
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.com
Micron's projections are set so high that even great years may not be enough to meet them. Samsung's Q3 results show the risk: revenue of $145.6B missed the $150.7B estimate, and operating profit of $80.2B missed $81.1B. x.com
Micron's AI-driven cash generation looks outsized for its size amid market concern about debt risk. Its quarterly free cash flow has reached about $32.9B in under two years, above the peak quarters shown for Meta, Amazon, Google and Microsoft; only Nvidia and Apple have posted higher quarters, despite each being about five times Micron's size. x.com
Micron faces a tough road through 2027 because the current AI spending path is not economically sustainable and tech progress can undercut memory demand. Micron's weak price action on blowout earnings is a tell. Token usage will keep rising, but Nvidia is already pivoting to LPUs with Groq, and tech progress should never be underestimated. x.com x.com x.com
If Micron has only two years of decent forecasts, its limited visibility warrants a lower multiple, not a higher one. x.com
Micron's AI memory-chip sales and accelerating growth support its upside case. Its 3.3/5 WATCH rating reflects a business with 60% of sales from cloud and data-center chips, 64 cents of profit per sales dollar and 256% sales growth last year. At the Oct. 15 close of $878.84, it traded about 42% below estimated fair value of $1,512.34. The case needs strong sales growth and expanding margins and cash flow; slower growth or a price outrunning the business are warning signs. x.com
Micron's $1 trillion market cap echoes Cisco in 2000, when the story got too big and multiples went parabolic before the bloodbath. An AI bubble pop is inevitable. x.com
