Markets have been very wrong before, why would they be right now?
u/Forget_me_never ·
Reddit — r/ValueInvesting
· June 10, 2026 at 14:39
· ⬆ 15 pts
· 💬 51 comments
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AI Summary
Summary
The post compares the pandemic-era overvaluation and subsequent crash of companies like PayPal to current valuations of memory/equipment suppliers (Sandisk/WDC and Micron/MU), arguing that temporary data center demand is being extrapolated into unsustainable growth.
The author believes that when data center investment slows, companies like xAI will have overbuilt, orders will be canceled, and share prices will drop significantly.
Quality assessment: Speculation based on historical analogy and cyclical reasoning; lacks detailed financial data but presents a coherent bearish thesis.
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There's a long list of companies that saw huge valuation increases in 2020-2021 and then fell greatly in the following years.
For example, Paypal's share price almost tripled during the pandemic to $300 but is now down to $42.
The market saw revenue growing fast and extrapolated it beyond reason. It underestimated future competition and overestimated future demand.
Now the market is likely doing a similar thing with equipment suppliers like Sandisk and Micron. Temporary demand increases are wrongly being extrapolated into future demand increases. When the data center investments slows down, there will be a drop in share prices.
Some companies will build more data centers than they ultimately need like xAI who is renting theirs out. Other big companies will decide to withdraw order reservations and slow investment.
The author observes that memory suppliers like Micron are experiencing a temporary demand spike from data center builds, similar to the pandemic-era demand surge for PayPal. When data center investment slows (as with xAI renting out excess capacity and potential order cancellations), the extrapolated growth will reverse, leading to a sharp price decline. Short Micron as a cyclical overvaluation play, betting on mean reversion once the data center capex cycle peaks.
The author specifically names Sandisk (Western Digital) as another equipment supplier with inflated valuations due to the same temporary demand. As data center investment normalizes, excess inventory and canceled orders will hurt WDC’s revenue and margins, triggering a share price drop. Short Western Digital as a paired trade with Micron, following the same cyclical reversal thesis.
This Reddit post, published June 10, 2026,
features u/Forget_me_never
discussing MU, WDC.
2 trade ideas extracted by AI with direction and confidence scoring.