Micron Technology (MU)

You can add to this. We're not at the end of the cyclical trade, nowhere near. Buy dips during volatility.

He bought it 2 months ago and is flat, but likes it here now. The weakness after earnings was due to levered ETFs and margined accounts starting in Korea. But that's behind us. He thinks AI spending will continue. 

Very inexpensive. Sector is extremely cyclical, leading to major moves in stocks. Stock's starting to rebound here. You can start accumulating. Valuation is very attractive, as is the growth rate (159% says his terminal, so he'll have to check on that). Recent weakness could be due to profit-taking.

He recently bought two tranches, averaging $1,000, though today at $877. He thinks the cycle will be elongated, so buying MU at 6x forward PE with earnings growing through the roof. He doesn't believe demand for their chips will plummet. The hyperscalers' reports of late show only growth.

It has $20 EPS power. AVGO's AI semi pipeline is $100 billion. MU is a new position for her, small and volatile, but they have $100 billion in bookings for the rest of the year, a lot of contracts. They're in the sweet spot of the AI memory shortage.

He sold very early. He liked the management, but had no clue how acute the shortages were in AI. He took profits, and MU kept rallying. Happy to take profits, though.

More room to run and grow over the longer term. Two main areas:  data centres plus photo storage on devices. Still one of the biggest winners from the AI boom. Pullback is normal and healthy. Long-term agreements with customers are making the business more predictable. Trades at just 6x forward PE. Sees upside of ~80%. Yield is 0.07%.

His team has been writing calls -- that's been working because the price has come down and the volatility's really high. One of three companies forming a monopoly, so you have to have a position. His price target is $1508, but expects the better part of the summer to see consolidation in a wide range.

It's more of a trading stock. It's a warning when stocks fall on good news like this. The memory space is volatile, boom or bust. He wouldn't own this for the next 5 years. It has above-average volatility.

Shortage in memory chips isn't going away anytime soon. Analysts' projected profits for this year are 10x what revenues were 3 years ago. Has lost money 9 years of the last 25. Risk/reward on the eventual normalized demand is not that favourable, don't put new $$ in today.

If you already have exposure, scale back or even exit.

RSI is in the lower half of his US equity universe, in the "red zone". Big run, but rolling down. Down 10% today. Breaking down technically. Took out $1000 and kept on going. Not looking great. Underperforming overall market.

Do you believe the memory cycle will have several years of strong legs? Will the diffusion of AI command a biblical amount of memory? And are these companies meeting this demand that's coming? The market expects generational demand for these companies. But in year 3 and 4, Chinese supply enters the market and maybe there are algorithmic breakthroughs. The market doesn't expect the boom to last beyond two years, but if you believe it will last longer, then these stocks are cheap today. Sell today and wait. These are some of the most leveraged positions in years.