Micron’s Earnings Report Propels The Stock. What’s Next In An AI Market For Semis?

Bill Baruch shard his latest thoughts on Micron Technology after the company reported earnings. As pricing improves and supply of semiconductor bodes favorably for the company, Bill shares the outlook across the semiconductor space and how to make sense of this AI cycle.

TRANSCRIPT

Now, one thing I really do like, going back to last year, the Micron CEO, when he speaks, people listen, he was talking about it last year, about it’s going to be a tough year, it’s going to be going into this new one, and he hopes that his peers bring down their estimations. They did theirs last year, middle of the year, and the stock took it pretty hard. Now, it’s been able to recover very well out of this. The fact that he’s upbeat, I think there’s a good tailwind. Speaking of 2025, their revenue and their net income is going to accelerate, I think $6.6 billion in 2025. This is, I like this, I like memory, he talked about last quarter was the trough, I think this stock’s going to be, I heard Kramer say it earlier today, $100 stock, if we hold above yesterday’s low, that’s the line in the sand, I want to own this thing, and that’s my stop. Yeah, I think we’re right around the highs of the day now, about 7%, the gain from Micron. Yeah, and it’s going to stay like that for quite some time because of this AI play. They even used the Midas touch of NVIDIA, saying that NVIDIA is qualifying them. I know, Oracle, Dobie, everybody just name drops NVIDIA, and then you see the stock climb higher, but they said they’re in the final stages of qualifying their high bandwidth memory chips for the H200, a new chip coming out next year, which is a good sign, but even that won’t be about 12 to 14 months to come to market. Yeah, so we mentioned that this space has done well. You don’t own this name, I mean, you own others. What do you think here about what’s been an incredible move for the chips? Well, it’s been an incredible move, both in the size of the move, but also the breadth of it, right? We’re no longer just talking about NVIDIA and Broadcom, and at least in part, that’s predicated on the belief that end markets outside of AI are picking up. Internet of Things, PCs, mobile phones, automotive and all that sort of stuff. Now, I heard, Christina, I just heard you throwing a little bit of maybe healthy cold water on that, saying, hey, it’s price, not volume. But you can’t raise price, right, unless there’s actually end-user demand. Or let me rephrase this, and I’m asking you the question, because I’m bullish, both on AI but outside of AI, and at the very least, these markets like mobile and PCs look like they’ve bottomed, would you agree? Oh, 100%. So that is another factor. You’re seeing strength. They even said that they see low to mid-single-digit growth specifically for PCs. The smartphone market’s continuing. Data centers, though, you had the CEO say that it still remains elevated and it’ll take maybe till mid-fiscal 2024 to come down. So to your point, yes, those two markets are playing a role, but that’s a lower selling price than all of this high bandwidth memory. So is that going to be the trend that’s going to really propel them forward and justify these $100 price targets? It may explain why these stocks, such as a Qualcomm or an NXP, are quite a bit cheaper than, say, you know, an NVIDIA, just as an example, or an AMD, what you just said. To that point with NVIDIA, we’re throwing around 2025, 2026 numbers. With the estimates that NVIDIA has out there for 2026, it’s a multiple of 22, a PE of 22. Now, I mean, you got these hyperscalers like Microsoft and Alphabet, and they’re monetizing AI quicker than expected, which is going to be more GPU demand, more demand from NVIDIA in their H200 in the next year. Yeah, it’s going to be coming off the shelves flying off. Thank you for being here.

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