$MU dropping earnings Wednesday AH. Stock ran 7x in a year, sitting around $1000, market cap hit $1.2T but valuation still looks reasonable because everyone's pricing in the 2028 capacity dump risk.
What matters:
1. Long-term agreements expanding?
Last Q they locked 16 strategic deals worth minimum $100B revenue with $18B cash deposits upfront, 5-year lock. Watch for new deals or price renegotiations.
2. Pricing still running?
Revenue up 3.5x last Q but shipments only +3%. Price increases drove almost all profit. Key metrics: DRAM ASP, gross margin holding above 86%, spot prices still showing double-digit QoQ gains. HBM premium is collapsing though. Early year HBM was 4x standard DRAM pricing, now only $0.20/GB premium with 68% margins vs 91% on regular DRAM. The moat narrative is getting tested hard.
3. Buybacks
$18B free cash flow last Q with nowhere to deploy it. Management already said capital returns = buybacks. Listen for expansion plans.
Order fulfillment still at 60%, server memory demand up 80% by 2027, supply gap won't close until 2028. Direction is solid but execution and guidance will make or break this.
Either this thing rips another leg or reality check incoming.
What matters:
1. Long-term agreements expanding?
Last Q they locked 16 strategic deals worth minimum $100B revenue with $18B cash deposits upfront, 5-year lock. Watch for new deals or price renegotiations.
2. Pricing still running?
Revenue up 3.5x last Q but shipments only +3%. Price increases drove almost all profit. Key metrics: DRAM ASP, gross margin holding above 86%, spot prices still showing double-digit QoQ gains. HBM premium is collapsing though. Early year HBM was 4x standard DRAM pricing, now only $0.20/GB premium with 68% margins vs 91% on regular DRAM. The moat narrative is getting tested hard.
3. Buybacks
$18B free cash flow last Q with nowhere to deploy it. Management already said capital returns = buybacks. Listen for expansion plans.
Order fulfillment still at 60%, server memory demand up 80% by 2027, supply gap won't close until 2028. Direction is solid but execution and guidance will make or break this.
Either this thing rips another leg or reality check incoming.