Micron Technology (MU)

Down 10.57% today. Has great earnings power and a low P/E.

Is a secular, not cyclical, growth story. Because of data centre memory demand, there's a strong shortage in chips, MU locked in excellent pricing for years to come. He regrets not buying it.

20% of S&P gains this year are attributed to Micron. But at some point it stops growing at 294% and must moderate in coming years. It doesn't mean this story ends, though. If Korean's SK Hynix trades in the U.S. in July; the company has a large slice of the market share and will impact Micron.

He sold a third of his holding on Monday and today. His position got too large. Everyday, analysts kept raising the price target. It's not a growth stock. Selling at 10x 2027 earnings is not cheap. 

There's been hyper-demand for this and related stocks. At some prices, these high share prices have to come down, take a breather, and that's fine. Long term, there's plenty of life here.

From June 3-5 pulled back 20%. It trades at 46x PE and has 196% revenue growth and their inventory is sold out for the next 18 months. 

Be cautious. Could make sense if there's a substantial pullback. Beta is very high, 2x the S&P 500 -- if that corrects, this stock will move more quickly on the downside. Trades at 9.4x forward PE, growth rate is phenomenal. Very strong earnings growth.

Based on previous cycles where momentum can turn on a dime, Micron is especially vulnerable to this. Chips are acting like a commodity. That said, he doesn't see their share price or earning declining. A caveat is adding capacity, which has always killed the chips cycle. The difference is that now it takes longer given supply chain issues to add this capacity. Maybe one or two years out, MU will turn, doesn't know.

Demands is outstripping supply, driving prices up. Is this the right time enter a stock that's up so much (220% this year)? No technician will say it is. That said, the fundamentals support MU right now. Twelve months from now, capex can continue at this clip, though she is skeptical earnings can continue to grow 20-30% every quarter. Semis need a cooling off period.

It's too late to buy it. It up 219% this year. MU is seeing a massive uptick in earnings growth due to price increases. This situation rarely lasts after a couple of years when peers compete and become suppliers. Also, the LLMs and data centres will eventually find ways to use less memory. All it takes is for someone to say that they have found 20% more memory efficiency and MU stock could be $700 in two seconds.

Buying calls is likely the right strategy, for the near-term return. Don't buy long term or you will face the inevitable correction. It's trading at 60 million share daily, well above its average of 15 million. Options interest continues to grow. There's excessive speculation here, for sure.