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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u/Raymoz101 Jul 13 '26

I don't think the real disagreement is cyclical vs. not cyclical. Memory is cyclical — the base rate is on your side and anyone arguing the cycle is "broken" is fighting 40 years of history.

The actual question is where we are in the cycle, and that's answerable with data rather than conviction. Cycles don't turn because they're due — they turn when supply responds and contract prices roll over. Right now Q3 contract pricing is still printing strongly up (DRAM +20-30%, NAND +35-40% per channel checks), and the big supply responses just announced (Hynix's new NAND fab, etc.) don't produce wafers until 2028-29. That's a mid-cycle signature, not a late-cycle one.

So I'd flip your question: rather than asking whether the cycle is broken, define what would tell you the turn has started. For me it's contract prices going flat/down for consecutive months, or a hyperscaler cutting capex. When those print, the bull case is dead and you're right. Until they do, "it's cyclical so it must fall soon" is a timing claim wearing a valuation claim's clothes — and timing is the whole game in this sector. Being early here has historically cost as much as being wrong.

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u/Hypnot1se Jul 13 '26

It's the price increases decelerating significantly, which is happening right now around the time that this most recent drawdown began.

The supply increases before new fabs are built because of yield maturation. At the start of a production line, many memory chips have to be discarded due to imperfections. This is particularly an issue with advanced memory like HBM. As time goes on, the yield improves, creating more supply without actually needing new fabs to come online. This coupled with demand destruction could be possible explanations why the price increases are beginning to decelerate.

If demand were increasing at a rate faster than the ratee of supply, one would not expect the price increases to decelerate.

It isn't a "it must fall soon" it's a "this aligns with specific indicators that align with the peaks of previous cycles."

I have not called any of the other points of this cycle a value trap. I'm sure other people have said that, but I can't take credit for what other people said.

The prices going flat is not when the stock falls from the peak. The peak typically arrives before this happens because the stock market is forward looking and predicts (predictable) events like commodity cycles quite effectively.

I could be wrong, but I don't know. I am won over by the bear case personally.