Long post, but some thoughts on what happened in the market today…
Today was a particularly weird storm of price action because the logic going into the open was as follows:
- $MU crushed, saved the AI trade
- AI stocks should go higher due to MU proving its not cyclical, this should help the broader market get a lift
Instead, what we got right before the open…
- $AAPL announces massive price hikes and effectively uses MU earnings to be like, “See! It’s not us, but if memory gets 86% margins, then we have to raise prices!”
- This happens right after the hottest PCE in 3 years is reported, even with oil (the biggest proponent of inflation the past few months) still coming down
- Microsoft then joins the party and raises prices across all XBOX products, once again citing memory costs
Market then proceeds to take a nasty dip in every sector…except Memory.
I think what is happening here will be studied for a long time. The hyperscalers, the companies that are RESPONSIBLE for $MU and $SNDK being multibaggers, are getting destroyed because…well they can’t buy back stock, they can’t get FCF positive, and they don’t have memory’s pricing power.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
- BernardGilbert·17:32Ngl AAPL and Microsoft passing memory costs through this fast is ugly. I’m still in both, but where does FCF pressure ease first?LikeReport