As the second quarter earnings season gradually draws to a close, KeyBanc’s annual Technology Leadership Forum provides a welcome opportunity for a selection of longer-format deep dives into some of the companies at the heart of the AI infrastructure build-out currently underway.
As an investor in Micron personally, I have a vested interest in keeping up to date with what’s going on at the company. It’s been a torrid few months for Micron with their share price peaking at an astonishing $1225 in early July, followed by a rapid decline to where it sits today at $861, a reduction of around 30%.
Before you start to feel too sorry for Micron investors, that share price is of course still up >600% over the course of the past twelve months. In any case, back to the keynote and my key takeaways:
Micron’s relationship with their key customers has changed dramatically, in two ways:
far greater levels of engagements on new product roadmaps, e.g. joint engineering projects, R&D, validation etc.
Strategic customer agreements, of which there are now sixteen, with $22 billion of cash and cash-like commitments, of which $18 billion was just cash alone
There’s no sign of any letup in the supply-demand mismatch for DRAM, the current situation will persist through calendar year 2027
Aggregate demand continues to increase, and Micron is currently only able to service about 50% of the demand from their data centre customers.
Expect memory pricing to start moderating in the coming quarters. Micron can still improve revenue, margins through mix-shift and cost optimizations. In other words, moderating pricing isn’t a deal breaker as far as remaining invested in Micron is concerned, at least from my perspective…
Let’s dig in….
