Arrakis Global
Global Thematic Fund Manager
Micron and SK hynix are not worth owning here because too many bulls calling them cheap signals a shift. Too much Korean float sits in levered long trades, driving overnight volatility that sets a bearish tone for US names and forces PMs to cut size. Micron's SCA deals also shifted its story from a torque memory play to a longer-term investment and telegraphed a possible top in memory spot prices, as management seems keen to cap prices. Not short, just not long. x.com x.com x.com x.com
Memory makers' long-term agreements cannot protect pricing when buyers regain leverage. The market underestimates downside even before a price collapse; SK hynix's agreements price within market-linked ranges, per @jukan05. The agreements will be ripped apart when the market turns to buyers, at the latest when China ramps. SK hynix, Samsung, Micron, SanDisk and Kioxia are exposed. x.com
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.com
Micron, SanDisk and SK Hynix look very bullish because Samsung says the memory shortage will worsen in 2027. 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
Buying the DRAM dip looks too risky now because CXMT's ambitious next-generation 4F plan and SK hynix's aggressive production expansion raise supply concerns for memory stocks such as Micron, SK hynix and Samsung. CXMT is unlikely to become a serious competitive threat, but it could still weigh on storage-stock sentiment. x.com x.com
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.com
Micron is at its top because memory stocks peak when margins peak, well before the shortage flips to oversupply, expected by 2028. Memory is tech's most brutally cyclical business: shortage, record prices, margins and capex, then new capacity arrives at once and becomes a glut. Micron trades at record highs on record DRAM prices, with memory's biggest capex wave under construction. In past oversupply cycles it fell 90% in 2000, 80% in 2008, 50% in 2018 and 47% in 2022. x.com
SK hynix and other Korean memory makers' aggressive price hikes invite customers to optimize memory use, undermining the case for 90% margins despite a long-term shortage. Memory is the only layer raising cost per token. Elon Musk described Micron's future pricing as reasonable and other suppliers' as extortionate, warning that today's customers would not forget; exorbitant long-term contracts compound that risk. x.com x.com
Hynix's sold-out memory supply supports expectations for big numbers from Micron, still trading at 5x forward earnings. Hynix says its HBM and DRAM chips are sold out until 2029 and a chip shortage is likely to continue into 2030. Big numbers and capital return are expected after Micron reports in December. x.com
Micron is a cyclical, and if DRAM sells at cash cost at any point in the next 15 years, which is likely over that span, owners will be in deep trouble. The historical playbook is to buy memory when it looks bleak and sell when it looks rosy. When take-or-pay contracts showed up in past industries, prices often fell within 18 months and the stocks dropped as spot prices fell. @BeenThereCap counters that Micron is on pace to earn its market cap in cash within eight years. x.com x.com x.com x.com