Lesson from Micron (MU)

AI Summary

Author shares bullish second-order AI infrastructure ideas in First Solar and pipeline partnerships ET/MPLX, citing cheap valuations, power demand and volume-based toll-road economics.

FSLR — LONG The author lists First Solar as a cheap second-order AI trade: it has $14.63 EPS this year and projected over $23 per share in FY2026, implying a forward PE of 12. The causal mechanism is data-center electricity demand requiring more generation while the Trump administration favors domestic providers over Chinese competitors. The stated risk is that the Trump administration is not excited about renewables. Time horizon is FY2026.

FSLR has appreciated significantly in the last year, but has $14.63 of EPS this year and is projected to have over $23 per share in its FY2026, which would give it a forward PE of 12. The Trump administration isn't excited about renewables, but they prefer domestic providers over Chinese and data center growth likely means all hands will be needed on deck in terms of electricity generation.

ET — LONG The author likes Energy Transfer among pipeline names, citing a yield north of 8% and pipeline toll-road economics on natural gas volumes. Mechanism: nuclear has long lead times, so natural gas and gas peakers will plug the power gap for data centers, and more electricity capacity is needed even if the data-center buildout decelerates. Stated risks include uncertainty over whether the buildout drives commodity prices higher and that K-1s make it unsuitable for retirement accounts. Timeframe unspecified.

Even if the data center buildout decelerates, a lot more electricity generation capacity is needed. It's not clear if the buildout will drive the price of the commodity up, but pipelines are a toll road on volume. I like ET and MPLX the most, which are yielding north of 8%.

MPLX — LONG The author likes MPLX among pipeline names, citing a yield north of 8% and pipeline toll-road economics on natural gas volumes. Mechanism: nuclear has long lead times, so natural gas and gas peakers will plug the power gap for data centers, and more electricity capacity is needed even if the data-center buildout decelerates. Stated risks include uncertainty over whether the buildout drives commodity prices higher and that K-1s make it unsuitable for retirement accounts. Timeframe unspecified.

Even if the data center buildout decelerates, a lot more electricity generation capacity is needed. It's not clear if the buildout will drive the price of the commodity up, but pipelines are a toll road on volume. I like ET and MPLX the most, which are yielding north of 8%.

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I bought Micron back in mid-2024 in the 130s and watched it tank and not ever reclaim my entry price until September of this year. Of I course I sold most of it at 200, but that's not what this post is about.   

The whole time in 2024 and early 2025, I read about how MU is really cheap and cyclical and that memory will eventually be in high demand for later generations of GPUs. While it was a long wait, what's interesting is because it was cheap, MU was able to 4x this year once it did start running higher. Similar story on Seagate, Western Digital, and Sandisk. 

**This leads me to wonder: what are companies that are second-order tied to the AI trade and have stocks that are trading quite cheaply now?** The benefit of investing in these is ideally you have a margin of safety especially if the AI trade falters, but if the AI trade does continue longer than expected, you benefit. The disadvantage is they're likely difficult to find. 

Here's the couple I can currently think of: 

**First Solar (FSLR):** FSLR has appreciated significantly in the last year, but has $14.63 of EPS this year and is projected to have over $23 per share in its FY2026, which would give it a forward PE of 12. The Trump administration isn't excited about renewables, but they prefer domestic providers over Chinese and data center growth likely means all hands will be needed on deck in terms of electricity generation.  

**Pipeline stocks:** Nuclear is getting a lot of hype, but reactors have a long lead time, so it's likely natural gas that will plug the gap. It's not cheap baseload power, but it's faster to get online and nat. gas peakers can supplement renewables. Even if the data center buildout decelerates, a lot more electricity generation capacity is needed. It's not clear if the buildout will drive the price of the commodity up, but pipelines are a toll road on volume. I like ET and MPLX the most, which are yielding north of 8%. EPD has the best balance sheet in the industry but has appreciated a bit. These issue K-1s so don't buy them in a retirement account... but there are some ETFs that provide exposure to the pipelines too. 

**What else is cheap now but connected to the AI trade?**

Ideas

u/thefrogmeister23 Reddit r/ValueInvesting

Cheap domestic solar benefiting from data-center power demand.

The author sees First Solar as a cheap AI-adjacent play because its projected FY2026 EPS of over $23 implies a forward P/E of about 12. Data-center electricity demand will likely require all generation sources, and the Trump administration prefers domestic solar providers over Chinese competitors. The main stated caveat is that the administration is not excited about renewables.

u/thefrogmeister23 Reddit r/ValueInvesting

Pipeline toll road on gas volume for AI

The author likes Energy Transfer among pipeline names, citing a yield north of 8% and pipeline toll-road economics on natural gas volumes. Mechanism: nuclear has long lead times, so natural gas and gas peakers will plug the power gap for data centers, and more electricity capacity is needed even if the data-center buildout decelerates. Stated risks include uncertainty over whether the buildout drives commodity prices higher and that K-1s make it unsuitable for retirement accounts. Timeframe unspecified.

u/thefrogmeister23 Reddit r/ValueInvesting

Pipeline toll road on gas volume for AI

The author likes MPLX among pipeline names, citing a yield north of 8% and pipeline toll-road economics on natural gas volumes. Mechanism: nuclear has long lead times, so natural gas and gas peakers will plug the power gap for data centers, and more electricity capacity is needed even if the data-center buildout decelerates. Stated risks include uncertainty over whether the buildout drives commodity prices higher and that K-1s make it unsuitable for retirement accounts. Timeframe unspecified.

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Ideas

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