Memory cycle and structural margins (with Heidi Stradwatt's, Shery Ahn)

Micron's 85% margins are unprecedented but need to be tested over a full cycle. Free cash flow and buybacks add confidence, but volatility and anxiety around AI demand will persist.

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Mehdi Hosseini 8.5

Memory cycle and structural margins (with Heidi Stradwatt's, Shery Ahn)

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AI trade is broadening into macro, but volatility and anxiety around demand forecasting will persist. Structural margin profile needs cycle testing.

Does Micron's strong forecast erase existential worries about AI growth sustainability?

Heidi Stradwatt's
Mehdi Hosseini

Volatility in earnings will remain. Free cash flow and aggressive buybacks are key surprises, but the anxiety around forecasting AI demand for memory will persist.

Consensus for August quarter was $825 EPS, they guided to $31. They continue to beat and raise.
Mehdi Hosseini

Long-term contracts do not alleviate cycle concerns much; customers were already securing capacity. The structural margin profile needs to be tested over a full cycle.

If there is an air pocket by early 2028, we will examine downside risk. Until then, the question remains open.
Mehdi Hosseini

SK Hynix's US listing is positive for valuation and multiples, but HBM market share dynamics (Samsung gaining) could impact SK Hynix more than Micron.

The supply chain is global; both SK Hynix and Samsung need better US market understanding and disclosure.
Mehdi Hosseini

The AI trade is already broadening into macro indicators. Memory names have doubled/tripled/quadrupled, contributing to the global economy.

Memory and networking are more critical bottlenecks than GPUs in some respects.

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