$MU Bears Are Missing the Real Memory Problem
Bears jumped on reports that $NVIDIA(NVDA)$ may use less HBM per GPU.
But $Micron Technology(MU)$ CEO Sanjay Mehrotra pushed back on the demand narrative.
The issue is supply, not demand.
Customers may put less memory into each server simply because there isn’t enough HBM to fully equip every system.
In other words:
They’re reducing memory per server so they can ship more servers.
That’s very different from AI demand weakening.
And there’s a limit to how far you can de-spec.
You can go from 12 HBM stacks to 8.
But you can’t keep cutting memory while AI models continue getting larger and workloads become more memory-intensive.
Micron’s pricing power tells the same story.
For every $100 of memory sold last quarter, Micron kept roughly $87 after manufacturing costs.
COGS increased only 14% YoY while revenue nearly 5×.
That is an extraordinary pricing environment.
The memory market is simply supply constrained, and customers are paying whatever it takes to secure the bits.
Now look at what happened to Micron:
2 years ago
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Share price: $110
-
DRAM revenue: $18B
-
NAND revenue: $7B
-
EBITDA: $6B
-
EPS: -$1.40
Today
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Share price: $1,072
-
DRAM revenue: $101B
-
NAND revenue: $32B
-
EBITDA: $109B
-
EPS: $75
And despite that transformation, the market is still valuing $MU at roughly 6× forward earnings.
🤯
Micron is forecasting another record quarter, with $61.5B of Q1 FY2027 revenue and gross margin of 86.25%, while management expects memory supply conditions to remain tight through 2027 and 2028.
The market is debating whether AI needs less memory.
The more important question may be:
What happens when AI needs more memory than the industry can physically produce? 👀
Markets are always moving - and sometimes, the best move is knowing what works for you.
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