Memory Crunch Prompts Bets on Micron Earnings Blowout – The Daily Upside

Skeptics who point to the memory industry’s boom-and-bust history see bulls as being a little too high on their own chip supply.
Sean Craig
sean.craig@thedailyupside.com
Shares in one of the artificial intelligence supply chain’s most important providers, Micron Technology, have surged 880% in the past 12 months. After rising 6.8% yesterday, the memory hardware manufacturer’s stock closed at a record $1,211 and its $1.3 trillion market capitalization made it the world’s 13th-most valuable publicly traded company.
A new supply deal with Anthropic, plus Micron’s “strategic investment” in the soon-to-list AI developer, marked the latest signals that memory chips may be an integral part of the most lucrative infrastructure play of the decade. But, all that said, expectations on Wall Street for the company’s quarterly earnings report tomorrow are now higher than the crowd at a Phish concert. Skeptics who point to the memory industry’s boom-and-bust history see bulls as riding a little too high.
Goldman Sachs estimates $7.6 trillion in AI capital spending from this year through 2031. As one of the few companies capable of making the high-end memory and storage hardware needed to run advanced AI models, Micron is an essential component of the tech’s supply chain.
With a memory crunch expected to last until at least next year, the Boise, Idaho-headquartered company and its South Korean rivals Samsung and SK Hynix have gained extraordinary pricing power. The three control 89% of the Dynamic Random-Access Memory (DRAM) market, where prices have quadrupled in the past year, according to ING. Micron’s previous quarterly earnings report tells the story: Sales rose nearly 200% year over year to $23.8 billion. Analysts expected even more explosive growth tomorrow, with a consensus forecast of roughly $35.5 billion in revenue, more than triple Micron’s $9.3 billion haul a year ago, according to FactSet. Whether that’s sustainable is still a matter of debate:
‘A Fundamental Shift’: Bulls have argued that today’s memory shortage is different from past cycles because it’s driven by massive hyperscaler capex plans, rather than trends in consumer electronics like phone and computer model releases. “Memory is no longer a cyclical commodity,” IDC associate vice president Soo Kyoum Kim wrote on Monday. “It has become a strategic infrastructure input.” He added that data shows “a fundamental shift in demand architecture, away from consumer electronics, where seasonality and upgrade cycles govern behavior, and toward AI training and inference infrastructure, where demand doesn’t normalize between quarters. It compounds.”
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