Ted Zhang
Portfolio Manager of Turbotection at Revere Asset Management
Micron's latest earnings may have marked the top for memory and semiconductors, because cyclical stocks peak on the best news and numbers. Record EPS, 80% margins and low P/E ratios are cited now, not in late 2024 and early 2025, when Gavin Baker and Citrini bought before results showed up. As with the supply-and-demand stories during gold and silver's parabolic run, the memory bottleneck may stop being discussed within six months as the crowd moves on. 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
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'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.com
Memory stocks are at the peak of the cycle, and FOMO buying into Micron and SanDisk now could be one of the dumbest moves. Chinese factories are coming online at lightning speed, which is why Micron is signing multi-year deals, and pricing power is peaking right now. The market is forward-looking, so a low forward P/E matters little if net income drops 60-90% a few years out. Per Kalshi, the memory ETF just passed $25 billion in assets for the first time. x.com x.com x.com
Memory stocks face huge downside because memory is a commodity, and today's undersupply will turn to oversupply as capex rises. Demand is inelastic, so suppliers have pricing power only while undersupplied; Samsung, SK hynix and Micron are all raising capex, and China's big DRAM expansion will ease shortages across the chain. Stocks peak before financials weaken, DRAM prices are already falling, and customers are optimizing memory use, so low P/Es offer no protection. x.com
Rising memory contract prices strengthen the case for memory stocks still far below their highs. JPMorgan forecasts Q4 DRAM prices up 13% and NAND up 18%; Micron is 28% below its 52-week high, Seagate 44%, Sandisk 47% and Western Digital 55%. x.com
Memory makers face an inventory overhang because upcycle shipments moved stock to module makers, distributors and customers rather than clearing it. That transfer showed up in reported earnings. Prices have plunged since the October holiday; once expectations of further increases disappear and demand sentiment softens, high-priced inventory will surface and selling will be much faster than the earlier restocking. x.com x.com
The memory sector is finished because China's CXMT has advanced a 4F² DRAM architecture that could greatly increase density. Micron, SanDisk and other memory-stock holders will bleed for months; China will lead AI moving forward, and those stocks are already paying the price. x.com
Micron's $150B of long-term contracts with price floors give memory unprecedented visibility, but macro fear is keeping the market from awarding a structural multiple. Those deals should exceed 35% of revenue through 2030 at margins above any prior peak, and revenue and margins should rise every quarter of 2027 even as price hikes moderate. That depends on increasingly debt-funded AI buyers paying amid a September Fed hike and 20-year-high yields; the next leg needs de-escalation in Iran. x.com
Micron and memory now call for great caution after an earlier bullish view, because several announcements of new supply coming online have appeared in recent weeks. More supply will keep coming as long as prices stay elevated. The memory cycle may last much longer than people think, but the near term looks tough for bulls. x.com x.com x.com
