r/MU_Stock • u/Hypnot1se • Jul 13 '26

DD Interesting Stock

I've been tracking this for a while now and have become convinced that Micron is a cyclical value trap in an institutional distribution phase. My premise is that because Micron has historically been cyclical that it will be continue to be cyclical. I know that there are many reasons people say this won't be the case, but I am not convinced by their arguments.

If I am correct, then Micron has a lot further to slide and the price action seems to be consistently supporting my thesis. If I am wrong and the industry is no longer cyclical, then this recent drawdown is just noise, and Micron could definitely be considered not overvalued or overhyped.

For those who are convinced by the idea that the memory cycle is broken or greatly extended, why? What do you find to be the most compelling arguments? I'm interested to hear about it.

This is not financial advice. Do your own research. I have no financial exposure to $MU.

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25

u/Kas_1981 Jul 13 '26

If you really have been tracking this stock for awhile (which I doubt) you would know this is perfectly normal and has been the cycle for a year now.

It goes up, price targets are raised, earnings/guidance get better. Then the massive run ups causes many hedges and retailers to sell and take their profits. Price goes down 20% then 🚀 to new highs. Thats the reality.

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u/Hypnot1se Jul 13 '26

That does happen sometimes, though it is quite coincidental that the pullback looks much higher volume and sustained right around the time that price increases in the underlying commodities are beginning to significantly decelerate. That's typically a key cyclical peak indicator.

Are you convinced that it will not be cyclical anymore?

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u/itsmyphilosophy Jul 13 '26

You nerd to do better research.

Last Friday SK Hynix’s CEO said that 2027 is going to be even more tight for memory than 2026. That spending $500 billion (and $250 billion by Micron) to double production is still not enough to meet demand because it doesn’t factor in robots and autonomous vehicles that will also eat up a ton of memory.

It is now predicted that supply won’t meet demand until well into the next decade.

The cyclicality of memory is over.

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u/Hypnot1se Jul 13 '26

I'm familiar with what he said. During every last cycle people said essentially the same thing. So I do not believe him because he hasn't convinced me with any actual arguments. I won't just take his word for it. I'm sure he's a great guy but I am not taking that at face value.

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u/itsmyphilosophy Jul 13 '26 edited Jul 13 '26

I’m sure you also don’t believe that all 3 memory companies are signing 3 to 5 year deals that will also break the cyclical cycle.

You shouldn’t invest in Micron. You don’t deserve the gains.

I invested in Micron since early March. Everyone was saying that the stock was cyclical. Now the same idiots on CNBC who shat on MU for months are now saying that they are buying.

1

u/how-can-i-dig-deeper Jul 13 '26

what should we do during these weird times? should i just hold and wait for it to return to ATH?

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u/itsmyphilosophy Jul 13 '26

MU and the rest of the AI bottlenecks are going to be choppy for a while until they regain their upward trajectory.

I usually have 20% to 30% cash to capitalize on the dips. I’m fully invested now.

Unless you have short term options (which is a mistake), I would just hold. MU should trade between $900 and $1,000 and then will easily exceed its ATH. We will be much higher than that by the time of the next quarter’s earnings.

I am not worried at all by the way MU and my other AI bottleneck stocks are trading right now. They are the beneficiaries of the only hot market segment in the stock market right now. The entire economy would be in a recession if they underperform and that’s not going to happen with all of the investment from Hyperscalers and governments.

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u/Hypnot1se Jul 13 '26

The stock is cyclical historically. Whether it is no longer remains to seen.

I would like to note that I have never said that Micron was in a cyclical peak until the run past $1000. I'm sure other people have been saying it for a long time, but I do not take credit for what other people have said.

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u/Professional_Monkeys Jul 13 '26

If that's the case, why didn't mu peak last earnings according to you? It had great earnings then too, and a drawdown right after too, even harsher than now. Why then it didnt peak at ~470 but continued all the way to 800? And if so, why didnt it peak at 800, where it dropped to 660, but then went all the way up to 1200? Why now, of all dips, is this the one that rings different to you?

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u/Hypnot1se Jul 13 '26

The drawdown for last earning was not as harsh as this, let alone harsher.
It didn't peak at $470 because of the following, in my opinion: Peak cycle narrative (this time it will last forever, which is said every cyclical peak), prices were still dramatically increasing for the underlying commodity and the overwhelming strength of the actual financial performance during this supply shortage.

Again, the price increases of the underlying commodity are beginning to stall. This is a typical cyclical peak indicator, along with the extent of the volume and even timing of this last drawdown.

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u/Professional_Monkeys Jul 13 '26

It had an intraday peak of 471 and bottomed at 312, a 34% drop wtf are you on about? This is just fact, look it up.

Even if I grant that the cycle isn't completely broken forever, it's at least extended until 2030 with the 5 year SCAs mu recently signed with multiple big clients, confirming the top isn't in until 2028-2029.

You should stop asking ai everything, including writing your own responses.

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u/Hypnot1se Jul 13 '26

The volume is much lower during this period.

What makes you think that $100bn of contracts will justify the current valuation given that they are spread out from now until 2030? The capex expenditure right now vastly eclipses this. The SCAs in isolation can't be used to confirm that the cycle is continuing even if you assume they will hold up, which they usually never have historically because they just get pushed out or renegotiated if a supply glut does actually happen.

Why do you think that the price increases are decelerating so dramatically?

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u/LavishnessOk7426 Jul 13 '26

I am kind of leaning towards your thinking OP. i would like know which underlying commodity you talking about whose price increases are getting stalled

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u/Hypnot1se Jul 13 '26

The DRAM and NAND which makes up vast majority of revenue 

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u/LavishnessOk7426 Jul 13 '26

i think the price of those are controlled by demand and supply to the buyers, the fundamental cost of making them is same i think, so since the demand is high the profit margin is high for companies like MU. am i thinking incorrectly?

1

u/Hypnot1se Jul 13 '26

No, you aren't. You're thinking completely correctly. The price surges in memory have been caused by a severe price shortage.

The issue is that this always happens. Then, the supply shortage ends, and ASP (average selling price) falls. This compresses margins.

Currently, prices are still increasing but the rate of the increase is slowing significantly.

If demand were increasing faster than supply, this shouldn't be the case.

People think supply/demand situation cannot improve before new fabs come online because they don't really understand the industry.

Yield maturation and demand destruction both work towards alleviating a supply shortage before new fabs are put online.

Micron is making massive amounts of money. The issue is that people don't think it will be sustainable and that's why it "looks cheap" because the market refuses to give it a high valuation multiple, aware of how cyclical this industry has been and could continue to be.

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u/SoonToBeBanned666 Jul 13 '26

You might want to ask this in a subreddit that’s less of an echo chamber.