Micron, that purveyor of memory chips, experienced a rather tiresome tumble this Monday morning. A six percent dip, if you please, before rallying – rather feebly, I thought – to a mere 1.8% loss by lunchtime. One does wish these things would make up their minds.
The curious part? This occurred on the very day analysts at TD Cowen, those invariably optimistic souls, predicted a 55% surge in Micron’s stock, eventually reaching the frankly extravagant sum of $600 a share. Really, the timing is simply dreadful.
A Most Generous Forecast
Apparently, Micron is now expected to earn $60 per share this year – a significant improvement on their previous, rather pedestrian forecast of $50. At ten times forward earnings, TD Cowen arrives at that $600 valuation. One wonders if they’ve been sampling the sherry a little early.
And it doesn’t stop there, naturally. TheFly.com reports that DRAM supplies will remain “tight” for “multiple years” – a phrase guaranteed to send shivers down the spine of any sensible accountant. This, of course, boosts prices for computer memory. Micron might not consistently earn $60, but TD’s analysts, with their usual enthusiasm, posit a “normalized” earning of $50. A further 12-times valuation leads them, inevitably, back to that $600 figure. One begins to suspect a rather determined optimism at play.
A Buy, You Say?
So, why the downward trajectory today? One might reasonably expect a bit of a rally on such a glowing report.
As Barron’s rather dryly points out, the reason for Micron’s woes has little to do with TD Cowen’s pronouncements and everything to do with Samsung. Samsung, it seems, is preparing to begin “large-scale production of the next generation of high-bandwidth memory chips” as early as this month. A most inconvenient development.
The worry, naturally, is that increased supply will short-circuit the DRAM price increases TD Cowen is so confidently counting on. It’s a depressingly familiar story, really. The cyclical semiconductor industry, in its infinite wisdom, is poised to do what it always does: transform today’s boom into tomorrow’s bust. A rather predictable outcome, wouldn’t you agree? One simply despairs.
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2026-02-09 21:32