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MU just dropped numbers that broke the old memory playbook. Q3 did $41.46B in revenue, up from $9.3B a year ago, EPS $25.11 when the street was looking for like $20. The part that actually got me was the margin, 85%, nobody had that modeled, and then the Q4 guide somehow came in bigger, $50B at 86% margin and $31 EPS against the \~$43B everybody penciled in. Data center alone was over $25B in the quarter, that annualizes past $100B. 85% gross margin is higher than NVDA has ever printed, the actual king of AI topped out around 78% at its best, and MU is doing it at $50B revenue? Wow. Memory or anything legal is not supposed to do this. Memory used to be the boring cyclical you trade around, now it's the one component the whole AI buildout chokes on if it isn't there, and has trillion dollar companies like aapl, nvda, msft, googl, meta in a battle royale trying to grab as much as they can.
Immediately after earnings, BofA went to $1,550, UBS $1,625, and Barclays and Susquehanna both jumped to $2,000, with highest target at $2,200. These are the same sell side institutions that get paid to lowball you so when they are the ones slapping 2k on it, the question isn't "is 2k insane" anymore, it's do you own it before everyone else and their wives boyfriends catch on. I been building my thesis for 4 months (check my post history and feel free to read all the critical comments saying the top is in at $500, $600, $700, etc), the memory boom/death crash cycle is broken or at least delayed by years. I get it, MU always traded cheap because you could never trust next quarters numbers, and that's the exact thing breaking right now. MU signed 16 long term customer agreements, roughly $100B of revenue locked in, take or pay. so they've got real visibility years out while supply physically cannot show up, new fabs don't print meaningful output until fiscal 2028 and mgmt flat out said tight through 2027 and beyond. demand booked, supply can't arrive in time. that's the whole trade. anybody still shorting memory into this is the one getting carried out the door this week.
Here is how my 2k math works and is even a bit conservative. Annualize the Q4 guide and you're at approx $124 forward EPS. Even if we factor in an annualized 10% drop to $110, 2k/share is 18x that. 18x is a normal multiple on a company growing data center triple digits with HBM4 going into NVDA's next platform. you don't need a miracle here, you just need the market to quit pricing it like 2019 MU and price it like what it actually is now. The demand side is screaming the same thing. AAPL just ate like double on memory without even fighting it, jacked up its product prices, and is now basically begging washington to let it buy chinese chips because the big 3 have nothing left to sell it. When apple is that cornered you want to be the one holding the supplier.
Of course we have risks, the hyperscalers pull capex or get way more efficient, demand cracks before the new supply lands and a stock priced this rich is not going to forgive it. CXMT and the whole china memory thing is a real overhang but that's a 2027+ problem not a tomorrow one. near term though, demand's locked, supply can't get here, l says tight past 27. i know which side i want. MU 2k lfg.
My current positions: 1,000 shares; 10 6/27 MU $500 short puts