A Bearish Outlook Into Micron

>Note: I transposed this article from my own newsletter and formatting on Reddit made it a bit messy. Some tables and graphs that where presented as images are missing here. This is the first time I write about a position I do not hold, and after doing so I feel like future price action has much more nuance to it than analyst revenue forecasts might imply. Micron is currently a monster compared to where it sat just under a year ago, with its share price moving during that span from around $100 USD to \~$1,000 USD, which is almost x10 from the August 2025 price. This has come from a company whose revenue has grown from $37B USD in 2025, to a trailing twelve months of \~$60B USD during that same time, and heading for an annualized figure of \~$95B USD. Revenue is on pace to almost triple from last year’s, with analyst consensus leaning towards $110B USD, effectively reaching that multiple. For any company this is incredible growth, however we have seen Micron in the past pull $30B USD in revenue for 2022 to then half that number for 2023, which is common for any cyclical stock. That said, many argue that Micron has entered a “supercycle”, for which I don’t quite see how Micron’s current situation might resemble one. This argument comes from the concept of AI causing a structural shift in the memory market, which could position Micron to get out of its cyclical status to become a critical long term partner for hyperscalers. When I read about these ideas, I can't call anyone wrong per se, but the number of assumptions these hold as true is something that stands out. So let's break some of them out. # “Its not a cycle” This argument assumes that AI capex will be sustained for at least half a decade, and that the demand for memory and storage will scale with it at an even rate. I can see this as partially true for HBM (High Bandwidth Memory), but for DRAM and especially NAND it doesn’t seem to hold up in the same way. HBM has effectively translated into long-term contracts with hyperscalers and data centers. As well as integrated development with NVIDIA for the Vera Rubin and Blackwell Ultra lines, which is not something to handwave, as this will translate to billions in HBM revenue. The conflict is that DRAM still makes up \~72% of their revenue. If hyperscalers and AI-adjacent data centers move into HBM, that conversion could subtract from overall DRAM demand. In addition, DRAM does not require the same level of manufacturing complexity as HBM, leaving space for new or existing players to increase production. The same can be said about NAND, meaning these two products are still part of cyclical markets. # The Margins With HBM only being \~8% of Micron’s revenue and expected to become 15% to 20% of the company’s revenue, this still leaves us with up to 85% of revenue bound to cyclical mechanics. So let’s crunch some numbers quickly. Even in a blue-sky scenario where HBM TAM grows to $110B and Micron manages to capture 30% of that, we are left with $33B of revenue. Assuming the consensus revenue forecast for 2026 of $111B, that leaves us with $78B worth of revenue that DRAM and NAND would have to cover in order to meet analyst base estimates. In a more realistic yet bullish scenario, where HBM TAM grows to $90B and Micron captures around 25% of the total addressable market, that $33B drops to \~$23B, and NAND and DRAM will have to pull $88B to meet the same estimates. This is happening after Micron killed Crucial, their consumer-focused brand, to focus on enterprise hardware. Consumer electronics are estimated to account for around 25% to 30% of the DRAM market. Meaning if enterprises reduce their DRAM demand, Micron doesn’t have a consumer base to counter some of the shock. Some Wall Street analysts project EBITDA margins as high as 70-80% driven by HBM, while Micron’s CEO has stated that non-HBM margins are currently higher than HBM margins. With how much of the current revenue depends on NAND and DRAM, counting on margins that high seems quite risky. Especially when you start to weigh the existence of strong competition for both. # The Competition and Microns Premium Micron is not alone in this market, but is currently being priced as if Samsung and SK Hynix did not exist. For perspective, SK Hynix currently has a 58% share of the HBM market and trades at two-thirds of Micron’s EV/EBITDA multiple, with a listing in the North American market scheduled for August. That said, assigning a multiple to Micron is not an easy feat, with historical multiples going as low as x3.6, trading around x7 a year ago, and now sitting at an x30 multiple. If we compare this to SK Hynix’s x20, we can put things slightly into perspective about how the market is pricing memory producers. It is very hard to give a specific price to this company a year from now, simply because the landscape it is sitting on is constantly evolving. Their long-term contract with NVIDIA for HBM memory sure brings a path for long-term profitability outside a typical cycle, but if either the DRAM or, to a lesser extent, NAND markets were to be taken by a competitor or a new player, as can already be seen with Chinese DRAM, Micron could be sitting under very different fundamentals. # Valuation I would like to note that for this article the situation of the company is so unconventional that assigning a single bear, base, and bull case as I typically do felt incomplete. So instead I provided the entire table so you can see the outcomes with different multiples and revenue assumptions based on different TAM projections. |**2025**|**TTM**|**Annualized**|**1y**|**1 Year Tailrisk**|**1y Bear**|**1y Base**|**1Year Bull**|**1 Year Blue-Sky**| |:-|:-|:-|:-|:-|:-|:-|:-|:-| |HBM|$1,200.00|$5,000.00|$8,000.00|$15,000.00|$6,800.00|$10,450.00|$15,400.00|$23,400.00|$33,000.00|||| |NAND|$9,100.00|$12,000.00|$19,990.00|$28,500.00|$21,600.00|$21,600.00|$23,400.00|$30,000.00|$37,400.00|||| |DRAM|$27,080.00|$45,000.00|$67,000.00|$93,000.00|$20,000.00|$29,400.00|$50,600.00|$65,000.00|$89,600.00|||| |Revenue from report breakdown|$37,380.00|$62,000.00|$94,990.00|$136,500.00|$48,400.00|$61,450.00|$89,400.00|$118,400.00|$160,000.00|||| |||$58,120.00||||||||||| |HBM % of revenue|3.21%|8.06%|8.42%|10.99%|14.05%|17.01%|17.23%|19.76%|20.63%|||| |NAND % of revenue|24.34%|19.35%|21.04%|20.88%|44.63%|35.15%|26.17%|25.34%|23.38%|||| |DRAM % of revenue|72.45%|72.58%|70.53%|68.13%|41.32%|47.84%|56.60%|54.90%|56.00%|||| |||||||||||||| |HBM Market Share%|18.00%|21.00%|21.00%|24.00%|17.00%|19.00%|22.00%|26.00%|30.00%|||| |NAND Market Share%|13.00%|13.00%|13.00%|14.00%|12.00%|12.00%|13.00%|15.00%|17.00%|||| |DRAM Market Share%|24.00%|23.00%|22.00%|25.00%|20.00%|21.00%|23.00%|26.00%|28.00%|||| |||||||||||||| |HBM TAM|$35,000.00|$45,000.00|$61,500.00|$85,000.00|$40,000.00|$55,000.00|$70,000.00|$90,000.00|$110,000.00|||| |NAND TAM|$70,000.00|$93,500.00|$153,800.00|$190,000.00|$180,000.00|$180,000.00|$180,000.00|$200,000.00|$220,000.00|||| |DRAM TAM|$112,800.00|$198,400.00|$304,900.00|$374,000.00|$100,000.00|$140,000.00|$220,000.00|$250,000.00|$320,000.00|||| |Ebitda Margins HBM|30.00%|35.00%|45.00%|37.00%|30.00%|38.00%|60.00%|60.00%|75.00%|||| |Ebitda Margins NAND|50.00%|50.00%|55.00%|55.00%|50.00%|55.00%|56.00%|60.00%|65.00%|||| |Ebitda Margins DRAM|50.00%|65.00%|80.00%|70.00%|60.00%|55.00%|60.00%|70.00%|80.00%|||| |EBITDA Marging Weighted avg.|49.36%|59.68%|71.79%|63.24%|51.32%|52.11%|58.95%|65.49%|75.46%|||| |HBM EBITDA Contribution|$360.00|$1,750.00|$3,600.00|$5,550.00|$2,040.00|$3,971.00|$9,240.00|$14,040.00|$24,750.00|||| |NAND EBITDA Contribution|$4,550.00|$6,000.00|$10,994.50|$15,675.00|$10,800.00|$11,880.00|$13,104.00|$18,000.00|$24,310.00|||| |DRAM EBITDA Contribution|$13,540.00|$29,250.00|$53,600.00|$65,100.00|$12,000.00|$16,170.00|$30,360.00|$45,500.00|$71,680.00|||| |||||||||||||| |EBITDA →|$18,450.00|$37,000.00|$68,194.50|$86,325.00|$24,840.00|$32,021.00|$52,704.00|$77,540.00|$120,740.00|||| |EV/EBITDA|**S h a r e p r i c e**|||||||||||| |5|$81.64|$163.72|$301.75|$381.97|$109.91|$141.69|$233.20|$343.10|$534.25|**UNDER 900**|**24**|**60.00%**| |7|$114.29|$229.20|$422.44|$534.76|$153.88|$198.36|$326.48|$480.34|$747.95|**900 TO 1000**|**2**|**5.00%**| |12|$195.93|$392.92|$724.19|$916.73|$263.79|$340.05|$559.69|$823.43|$1,282.19|**1000 TO 1600**|**5**|**12.50%**| |16|$261.24|$523.89|$965.59|$1,222.30|$351.72|$453.39|$746.25|$1,097.91|$1,709.59|**1600**|**9**|**22.50%**| |20|$326.55|$654.87|$1,206.98|$1,527.88|$439.65|$566.74|$932.81|$1,372.39|$2,136.99|||| |25|$408.19|$818.58|$1,508.73|$1,909.85|$549.56|$708.43|$1,166.02|$1,715.49|$2,671.24|||| |30|$489.82|$982.30|$1,810.47|$2,291.81|$659.47|$850.12|$1,399.22|$2,058.58|$3,205.49|||| |35|$571.46|$1,146.02|$2,112.22|$2,673.78|$769.38|$991.80|$1,632.42|$2,401.68|$3,739.73|||| * SCENARIOS | NUMBER | % OF SCENARIOS * SHARE UNDER 900$ | 24 | 60.00% * SHARE BETWEN 900$ TO 1000$ | 2 | 5.00% * SHARE BETWEN 1000$ TO 1600$ | 5 | 12.50% * SHARE OVER 1600$ | 9 | 22.50% * The table is a sensitivity analysis, not a probability model. The percentages shown are percentages of modeled outcomes, not probabilities that those outcomes may occur. In this table we can see how different scenarios react to different multiples. From the tail-risk scenario to the blue-sky scenario, we find that 65% of these 1Y forecast scenarios result in a share price under today’s \~$1,000 price. The second thing that stands out is that many of these scenarios require a DRAM TAM of over $220B and the ability to capture over 23% of that sector in order to sustain growth. Another clear pattern is that there is only one situation where, if Micron reprices at the same multiple as SK Hynix, the share price climbs over $1,600, and that requires a blue-sky scenario. Q3 earnings will be public June 24th, and that will give us a better picture of how the year might close. Micron needs over $70B in revenue across the back half to meet its forecast. Failing to do so could result in a very fast repricing, where I can see the realistic bottom around $350 per share. Based on the table, prices over $1,500 will require either the current multiple to be maintained or flawless execution in a regime where TAM for HBM, DRAM, and NAND all exceeded expectations by a large margin. Before closing this, I would like to make a note that the members of the C-Suite, who hold 0.25% of the shares, have been consistently selling ever since the price broke over $170 per share, with no notable buys. No one in management seems to be buying at the $1,000 price. This is not uncommon for stocks that have skyrocketed in a year, but the lack of buys, outweighed by overwhelming sells, is something worth noting. On the other hand, institutions make up over 80% of the remaining float, making the price susceptible to de-risking mechanisms during the upside and the downside. *As always, even if I don’t hold this position, I am not a financial adviser so do not use this article to make buy, hold or sell decisions. Always do your own research and/or contact a licensed professional before making financial decisions. I wrote this piece for research purposes driven by the interesting situation the company currently faces.*