Micron Technology
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During Meta's earnings call. Zuckerberg said. ' “We are increasing our infrastructure CapEx forecast for this year. Most of that is due to higher component costs, particularly memory pricing.” (CEO Zuckerberg)
Good for Micron
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Sandisk reported last night, beating EPS by $9-expected $15, reported $23 on 78% margins. Consensus guide was $6.5B but they blew that away with $8B at the midpoint and further margin expansion(80%). A guided 50% increase in EPS QoQ-not year. The stock actually came off the boil in AH which seems typical at the moment. The take away, it's a staggering result which bodes very well for the sector.
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Some industry lingo and implications. 'Samsung strikes LTAs at 0.5
The 0.5 floor refers to Samsung’s minimum guaranteed price (floor) in its long-term agreements (LTAs) for enterprise SSDs (eSSDs), set above $0.50 per GB.LTAs are multi-year supply contracts, typically spanning three to five years, between Samsung and major customers such as cloud providers and hyperscalers. These agreements lock in committed volumes and include pricing protections, often with a floor price to ensure stability for the supplier.
According to recent analyst commentary, Samsung’s LTA floor sits above $0.50/GB. This is higher than expected quarterly pricing — for example, around $0.35/GB in Q2 rising to roughly $0.45/GB in Q3. The elevated LTA floor indicates that long-term contracts are being struck at premium levels compared with shorter-term deals.What this means is that long term contracts are placing a floor ABOVE current elevated spot prices.
NB. Drives like the PM1733a / PM1753 / BM1743 top out at 30.72 TB-that's 30,720 GB or > $15k. I'd estimate the manufacturing cost is somewhere between 2.5-$3k. Nice margins.
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CEO Sanjay Mehrotra-fireside chat on Friday said......
The shift in AI memory TAM from a projected $100B by 2030 to roughly $100B today highlights how quickly expectations have been overtaken by reality. Sanjay Mehrotra pointed out that demand—especially tied to generative AI—has accelerated far beyond what the industry modeled even a year ago. Training large models was the initial driver, but inference at scale is now compounding the need for high-performance memory, particularly HBM. As a result, Micron Technology and peers are repositioning around a much larger opportunity. Mehrotra’s updated view of a $300B TAM by 2030, with potential to reach $600B longer term, reflects the assumption that AI becomes deeply embedded across cloud, enterprise, and edge environments.
NB-These projections depend on sustained investment but the takeaway is extremely bullish. He is always fwd looking(a long way) based on customer feedback and ordering.
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Interesting forecast-NB this not total memory, just NAND- not HBM(DRAM). At today's prices 1686EB would be north of 1 Trillion USD. So adding DRAM we arrive at a forecast of 1.6 $T. Looks like early innings
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We are rebalancing today, a timely opportunity to trim the surplus weight from Micron having touched $650 earlier
We purchased the holding in Feb 25 for $89.82
NB we are trimming it NOT selling is.
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Thanks for the heads up, are you buying into any other tech stocks. Thanks
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Hi Jason,
Tweaks at the last rebalance(yesterday). It's more a case at the moment of looking at some holdings, Meta for example and determining that given its growth the market is discounting it unjustly. If you look at what is happening lately money is flowing into some areas, leaving others out of favour which is fine if that is based on fundamentals however in MSFT/Meta's case I would take the view that growth is up, EPS is up but the stock is down. All we have to do is(if correct) add more weight to these and reduce a bit elsewhere.
I'm always looking at new ideas but it takes time to get comfortable with the business. Often the best opportunity is the one you currently hold- you get to know them very well and sometimes you think 'opportunity'. Stocks are almost always mispriced-some too high, some too low. Look at Micron, from 450 to 319(30 march) and today it's $650. That is an unusual situation however the principles are solid. If the evidence says hold, you do so. Never let a score board (tail) wag the dog(investor). We have been talking about its ridiculously cheap price for 6-9 months- we didn't get lucky. We did the work and it paid off handsomely. Patience is key.
If anyone wants to discuss they are welcome to contact me.
Regards
Adam
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Thanks Adam for the reply, im always interested in the tech stocks we hold and there progress.
Keep up all the good work the numbers are good.
Kind regards Jason.
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