What Micron's Upbeat Forecast Signals for Tech Stocks

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Bloomberg Jun 26 10:54 · 22.8k Views

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00:00 All right, Kim, let's first start with the quarter that was, I mean, we were expecting strength
00:04 largely because of this golden wave, if you will, of AI infrastructure.
00:09 Were these numbers in line with what you were expecting?
00:13 Kind of, but I think they really
00:15 eclipsed what I had thought they could do in this quarter.
00:19 Remember, the chips that are driving their
00:22 earnings higher sold out for the end of this year, which is next quarter.
00:27 So they're already booking next year's 2026,
00:31 you know,
00:33 high bandwidth memory orders and it looks like they're confident enough
00:38 to be able to deliver these products and raise their earnings even more
00:43 in the next quarter.
00:44 And I think that bears well for whatever is going to happen
00:48 after that.
00:49 Well, this is I'm curious about, as you know, a lot of the negative Nancies out there are really sort of looking for any Canary in the coal mine that would sort of knock this data center
00:57 AI
00:58 boom off its rocker here.
01:00 When you look at what Micron has to say today, does that give
01:04 maybe some ratification to the idea that there is a lot more room left in this data center build out, this AI infrastructure build out and how long, how much of A runway do you see?
01:16 That's that is a tricky question.
01:18 Your second question is how long we nobody really knows
01:21 and here's why.
01:22 While I believe that we are in, we use baseball terminology, maybe the second or third inning in this point, we don't know how fast the game is going to go.
01:32 Right now
01:34 companies are building the large language models and large
01:38 reasoning models, which as the name implies are large and they take tons and tons
01:44 of data center space to make it to to build these models.
01:48 But my worry is like, I don't really understand how many of these were going to actually need because companies are going to start building their
01:58 more
02:00 tailored models on top of these things.
02:02 So that's the big question is what does AI really look like in the next five years?
02:08 And nobody knows.
02:10 But I know one thing, it's probably not going to look like we think it is right now.
02:15 It never does.
02:16 It never does.
02:17 So where does that leave a company like Micron?
02:19 I know that when we're talking about the AI story, it's very much a high bandwidth memory chips, but they also have legacy chips as well.
02:26 And
02:27 the high bandwidth memory chip is just a small part of its business.
02:30 So
02:31 even though that part of the market, that part of its business is seeing high growth,
02:35 where does that leave the legacy chips and how much it
02:38 how much leverage it has on that front?
02:41 Well, that's a great question.
02:43 And I think the roller coaster of anybody that has been
02:47 an owner of Micron can answer that,
02:50 that this is a really constrained
02:53 little area of the chip manufacturing.
02:56 They there's only a handful of companies that make NAND and DRAM.
03:01 So whenever somebody brings on new capacity, it kills the
03:05 the pricing
03:07 of the whole environment.
03:08 So I think that will continue probably.
03:12 But I also believe
03:13 not only is AI data center going to drive demand, but you know what, we're going to want to have more real devices connected to
03:22 these data centers that are
03:24 not only feeding the data centers with, you know, information to process, but also answering questions about how should this pipeline run and all of the questions that things are going to hook up.
03:37 You know, real life computers are going to hook up
03:41 out in the world and
03:42 Micron and even companies like
03:45 old
03:45 A or AM DS, older products and God forbid Intel's products,
03:50 they might be used out in the world, not in the data center.
03:54 So it looks like semiconductors are going to be a hot item for the next.
03:59 I don't know how long, a long time
04:01 if
04:02 I mean, we saw NVIDIA today reclaim its record highs making that round trip back.
04:06 And of course, Micron has more than doubled at this point since
04:10 President Trump paused the tariffs.
04:12 If you're an investor in these names and you don't want to be adding to those positions, but you want to buy into the AI story, do you then go to an AMD or an Intel the the legacy chip makers?
04:23 Probably not.
04:24 I think that people who are in AMD right now, I'll be a psychologist here are probably
04:30 momentum lovers.
04:31 So they're going to try to find
04:33 things that are more like
04:36 Micron
04:37 that are driven by momentum, right, even though they're somewhat limited.
04:41 And I think we see that in after hours market with the other NAND and D RAM players that are public
04:48 Western Digital and
04:51 I forget the other one, sorry, I drew a blank.
04:53 But
04:54 you know, I think the more momentum names will probably get the love,
04:57 but I think investors, investors who are.
05:00 For a little patient might want to look further down the semiconductor chain to continue to play
05:06 in this area because this is where the chips are going to go.
05:11 As I said, we need,
05:13 you know, it's not just people asking questions on iPhones and
05:18 you know Android phones.
05:19 It's going to be devices talking to each other, and that machine chatter is going to drive a whole bunch of investment not only in
05:27 computing but also in bandwidth.
05:30 So I would look into telecoms as well because, you know, we have to get the information to and from the data center.
05:38 Yeah.
05:38 And that would be telecoms.