VenkatP
Physician, Growth & Value Stock Investor
Micron's numbers have already validated the thesis, and the memory cycle still looks extremely tight. Fiscal Q3 revenue was $41.46B versus $9.30B a year earlier, non-GAAP EPS reached $25.11 and adjusted FCF $18.3B, with cloud memory and core data center gross margins of 83% and 87%. Micron is shipping HBM4 in volume, with HBM4E due in 2027, while industry reports point to worsening DRAM and NAND shortages as AI consumes enormous amounts of memory. x.comÂ
Micron is a crowded trade, and the brief few-week memory bear market looks like the outcome where the thesis survives. Crowded trades tend to end in a 20-40% correction that flushes weak hands before the secular winner resumes, a 6-18 month sideways digestion while earnings catch up to valuation, or a true thesis break as pricing, margins, demand or competition deteriorate. For a fundamentally exceptional company, the violent correction is the best of the three. x.comÂ
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.comÂ
Micron and SK hynix pricing in a memory shortage past 2030 extends the memory-cycle case beyond the Street's 2028 expectation. SK hynix's record quarter adds evidence: per Wall St Engine, revenue rose 328% to $78.9B, operating profit rose 632% to $62.8B, and operating margin hit 80%. Agentic and physical AI could add demand as they roll out. x.com x.comÂ
Micron's roughly $1.37 trillion valuation already prices a durable rise in through-cycle earnings that memory's history has never shown. A reverse DCF at 9% WACC and 2% growth implies about $95 billion of steady cash flow, versus a record $9.2 billion and a ten-year average near $1.9 billion. At a 30% FCFF margin that needs about $317 billion of revenue, over 8x fiscal 2025 sales. The HBM bull case is real, but fiscal 2023's swing to a -37% operating margin shows how fast pricing reverses. x.comÂ
Micron is riding the AI memory supercycle: HBM for AI accelerators is sold out and prices are exploding, turning a former commodity price-war player into the hottest shovel-seller in the AI gold rush. From Q4 FY25 to Q4 FY26, revenue rose 379% to $54.2B, operating income rose about 12x to $43.8B, and EPS jumped from $2.86 to $33.36. x.comÂ
Each new AI wave is lifting demand across Micron's HBM, DRAM and storage products. Micron said training, inference, agentic AI and physical AI raise memory needs; the stock still trades at about 5x next-twelve-month earnings, leaving its growth story just getting started. x.comÂ
Inflation, rising rates, Chinese competition and rising AI-related financial costs are pressuring the memory market. Micron, Samsung and SK hynix look exposed; waiting for the cycle to turn. x.com x.comÂ
Micron's bet on 3D DRAM over rivals' 4F2 could give it an edge as AI memory demand rises. Micron expects shortages for at least two more years: HBM per GPU rose 3.6x from H100 to B300, inference memory per server doubled in three years, and agent context grows about 30x annually. It plans further 6F2 nodes, 1-delta DRAM in 2H27 and 400-plus-layer G11 NAND in 2027; processor-stacked vHBM is targeted around 2028. If Micron is right, rivals are spending on the wrong path. Overweight Micron. x.comÂ
Micron benefits because AI needs more memory capacity and bandwidth. HBM growth and customer commitments support that view, while pricing and returns on new capacity will determine how durable it is. x.comÂ
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.comÂ
Micron is still firing on all cylinders after fiscal Q4, and its uptrend is not over, though whether memory is cyclical or structural is unresolved and the lean toward structural is loosely held. Core data center is now 33% of revenue, and next quarter brings more growth at an 86.25% gross margin management sees as the fiscal 2027 floor. Physical AI could be the next TAM. Strategic customer agreements should exceed 35% of revenue through 2030, improving visibility. x.com x.comÂ
