Micron's record margins and AI-driven pricing power (with Matt Miller, Dani Burger)

Micron's 86% gross margins are unprecedented, driven entirely by pricing power due to severe capacity constraints across the memory industry. Long-term contracts (3-year avg, $100B minimum) will cap some upside but lock in pricing stability. Supply relief is not expected until at least 2027-2028, though quarter-over-quarter growth will decelerate. The AI memory boom is structural, not cyclical, as memory is now co-designed with GPUs rather than being a commodity.

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Micron's record margins and AI-driven pricing power (with Matt Miller, Dani Burger)

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Micron's structural demand story and pricing power support the AI/semi trade, but the analyst notes deceleration in growth rates and potential demand destruction in consumer electronics, suggesting a cautious rather than outright bullish view on the broader NDX.

Dani Burger

Micron's 86% margin forecast raises question of whether they have absolute pricing power that hyperscalers and Apple must pay.
Jake Silverman

It's all pricing power. Gross margins are far beyond historical precedent. Unit growth is limited by industry-wide capacity constraints, so pricing will continue to rise.
Matt Miller

When margins near all-time highs, competitors will want to build capacity quickly.
Jake Silverman

There is a long lag time (up to 3 years) to build fab capacity. Even with demand destruction in PCs/smartphones, there is no supply alleviation in the next two years.
Dani Burger

Nvidia's best margin quarter was 77%, so Micron's 86% is even higher. This must be bad news for hyperscalers whose budgets are consumed by memory costs.
Jake Silverman

If margins increase, someone is paying that margin. Hyperscalers and customers like Apple have to pay up. Apple is raising prices to protect their margins, which comes out of consumers' pockets.

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