Micron’s AI Triumph: A Portfolio Manager’s Satirical Take

by

The memory-chip purveyor Micron (MU) has long played the role of a stock market court jester, capering through the semiconductor sector’s carnival of fortunes. Memory, that most capricious of commodities, has historically made Micron a barometer of market madness-where prices and inventories dance a chaotic waltz dictated by the whims of supply and demand.

Yet here we find ourselves in 2024, watching this cyclical pauper transform into a prince of the AI ball. Investors, ever the tardy dancers, are only now beginning to waltz to the artificial intelligence symphony. Micron and its brethren craft high-bandwidth memory (HBM) chips-the digital champagne fueling AI’s bacchanal-and the stock has doubled this year, leaving luminaries like Nvidia and AMD gasping in its exhaust fumes.

After its August promise to “raise the roof,” Micron proceeded to demolish both its own expectations and those of Wall Street’s soothsayers.

Quarterly revenue leapt 46% to $11.32 billion, besting analysts’ $11.16 billion forecast like a debutante outshining her chaperone at a country ball. The fiscal year closed with $37.4 billion in revenue-a figure that might make even Scrooge McDuck blush.

In March 2024, Micron declared itself a principal beneficiary of AI’s golden age. The company has delivered on this prophecy with the precision of Nostradamus, achieving record revenue and profitability improvements that would make a Victorian industrialist proud.

Gross margins swelled from 35.3% to 44.7%, a transformation fueled by high-value data center products and DRAM pricing strength (HBM included). One might say the company has discovered the alchemist’s stone of semiconductor economics.

Loading widget...

Operating margins ballooned from 19.6% to 32.3% as R&D and SG&A costs were tamed with the ruthlessness of a Dickensian taskmaster. Adjusted EPS soared to $3.03 from $1.18, outperforming estimates of $2.86-a feat akin to finding a five-pound note in a pauper’s pocket.

The market’s yawn of indifference post-earnings announcement seems less a rejection than a shrug of inevitability. After all, when Micron ascended 40% in September alone, even the most ardent bulls might pause to catch their breath.

I. The Oracle’s Crystal Ball: A Prophecy of Continued Prosperity

Micron’s refusal to forecast the fiscal year feels less like omission than strategic coquetry. The Q1 guidance, however, reveals a company drunk on its own success.

Revenue projections of $12.2-$12.8 billion represent a 44% year-over-year surge at midpoint-$11.83 billion consensus estimates be damned. Gross margins are expected to breach 50% (50.5%-52.5% adjusted), a feat last achieved during the late 2010s’ semiconductor bacchanal. One might call it déjà vu, but with better margins.

II. The Spigot Remains Stubbornly Closed

Supply chains, that modern Sisyphean torment, have become Micron’s unlikely benefactor. Management reports HBM capacity sold out through 2024-a situation as rare as a sober bishop at a champagne christening.

Fiscal 2026 promises continued scarcity as AI’s insatiable maw grows hungrier. The company expects to sell its remaining 2026 HBM supply “in coming months”-a line that reads like a thriller’s inciting incident.

III. The Bargain Basement of Tomorrow

Micron now trades at a trailing P/E of 20 and forward P/E of 12.5-valuations that would make a pauper blush and a value investor salivate. Compared to AI peers, these multiples resemble charity donations.

While revenue growth rivals Nvidia’s, the market clings to outdated narratives of memory’s boom-bust cycles. Yet the AI era may have rewritten these rules entirely. The market, once a village fiddler, now plays to a symphony orchestra’s score.

Investors who dismiss Micron as yesterday’s folly might find themselves the butt of history’s joke-a punchline delivered in quarterly dividends and rocket emoji 🚀.

Read More

2025-09-25 18:08