Micron to Spend Heavily to Meet Demand

Summary

• Micron reported a phenomenal, blockbuster quarter with strong growth and margins, leaving no numbers to quibble with.
• The memory business is fundamentally supply-driven, not demand-driven, due to long lead times for fabrication plants (fabs).
• New memory supply will not meaningfully arrive until 2025, with Samsung and Micron potentially unable to catch up with demand until 2028.
• Demand visibility is high; large customers have already placed purchase orders for High Bandwidth Memory (HBM) through 2027, securing near-term demand.
• Micron forecasts tight DRAM and NAND markets beyond 2026, indicating prolonged supply-demand imbalance.
• Jensen Huang's commentary on $1 trillion in AI business (Blackwell and Rubin) implies ~40% annualized growth, supporting sustained memory demand.
• The shift from AI training to inference phases alters power and chip requirements, creating new memory demand cycles.
• Despite supercycle concerns, the analyst believes there is still room for memory stock appreciation, advising investors to remain invested but cautious.
• Key risk: Demand sustainability when new manufacturing capacity ramps up in 2025-2028, potentially outpacing growth.