Eric Jhonsa
Technology Portfolio Manager at Dutch Asset
Micron at about 4x potential 2027 EPS is pricing in a short memory cycle when it is far from clear supply will catch up with demand quickly. It guided to $75+ in annualized EPS while token consumption and KV cache needs soar, agentic workloads lift DDR5 demand, HBM4 raises the trade ratio from 3:1 to 4:1, and Nvidia's Rubin Ultra racks for 2H27 use 4x the HBM. Gross margins near 80% may not last and China will add capacity, but SK hynix, which expects shortages until 2030, is even cheaper. 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, 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.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 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 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'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 could triple if earnings stay high for longer and investors stop valuing it as a commodity business. D.A. Davidson's $3,000 target implies about 20x annualized Q1 earnings versus about 7x today. Management sees supply tight through 2027-28, with demand from hyperscalers and AI leaders. Customers cutting memory per device, like Tesla's AI5, signals scarcity. Strategic agreements backed by about $32B of commitments raise the trough. China competition and untested agreements are risks. 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 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 looks very cheap because the market underestimates how sustainable its earnings will be over the next few years. x.comÂ