Micron Just Got a Major Bullish Update

Guys, welcome back. Well, after relentless pressure that we have seen in the memory and the storage sector over the last few weeks, it was nice to see a green day today. A green day across the entire complex, across the entire Fab 4 or Fab Five, we'll call them. But I have to be completely real with you about it because as nice as it was, one green day does not mean that the downward pressure that we are seeing in the sector is automatically over. I think we have to be real with that regard. But seeing a bounce today does feel good, especially after digesting weeks of secular selling. But we can't overinterpret this single session as a full-blown trend reversal. Base building takes time and the overhead resistance that we see in this sector is completely real. However, today's trading action, the price action that we saw wasn't just movement of the stock price because there was major fundamental signals that were dropped right alongside with the positive price action we saw today. And those signals are what I want to cover in today's video because we're going to do a deep dive into the technical pattern of Micron. And then I want to show you the institutional darkpool. What crossed the tape today during Micron's action and then jump into the boatload of signals that we saw from Morgan Stanley, Key Bank, UBS today, all related to Micron, related to the memory sector overall. And then probably the most important and most interesting stories for me. One is let's decode what the chairman of SKH Heinix actually meant with his pricing comments because I think it was over interterpreted in the market today. And then I want to get to the new Kimmy K3 frontier model from Moonshot because everyone there was so many people on the channel I saw in the comments that said it was over once this was launched. This was the death of the sector. Well, it turns out this actually may be a bullish sign for the memory sector overall. So this is why we need patience in this sector. We need time to digest the news articles and not just react emotionally like we've seen over the last few days. But we're going to go through that story as well. We're going to cover all of that in today's video, but if you haven't done it already, make sure you hit like. Make sure you subscribe to the channel. Alita, keep building this community. We are off to a great start. And I just love seeing the engagement with all of us together across the community. So, let's keep it going. Let's continue to build it. If you get value from these videos, if you learn something from this channel and you haven't subscribed yet, because about 50% of our viewers haven't subscribed yet, make sure you take a moment and hit subscribe. All right, let's get started. Let's just go around the horn first and take a look at what we saw in the memory sector today. So, let me pull up the Micron chart. We'll start there. And like I said, we had a positive day today. Boy, it should felt good because we have been down for weeks in this sector. And I have definitely felt the pressure in the comments. It's kind of crazy when you see a couple weeks in a row the bears come out and they were out in the comments section. We haven't seen them in a while. When this stock was rallying, we're running up towards 1,200. I haven't heard a peep from the bears, but as soon as we start to fell pressure, I saw so many comments that this stock was going to 400. We're going to be at 600 today. It was over. And I just fundamentally didn't believe that because this sector and this kind of this the cycle we're in right now is completely different than the past. And I just think it's taken some people some time to really realize that and realize we're not dealing with consumer products. We're not dealing with smartphones and PCs when we have seen cyclical booms and busts in the past. This is data center. This will be edge. This will be robotics. The the applications for memory are just exponentially expanding and that's why I believe it. But boy, the boy the bears have been out the last couple days. So like I said yesterday, it's been testing my conviction as well. But I haven't faltered. My conviction remains strong. What we saw today was a positive day, but I don't want to over interpret it overall. But Micron was up $16.50, about $2 on the day, closed just over 865 a share. You can see in the after hours, we're moving up over 870 a share right now. So, some of the positive momentum that I'll show you in the candle chart, continued forward into the after hours as well. Let's see if we can continue that pace throughout the night and what it looks like when we gap up tomorrow morning. But if you look to the right side of the screen, you can see that SanDisk was up $36 today, closed at$ 1390. A little bit of kind of back and forth in the after hours. I saw it positive. It's down by about 95 cents today. Essentially flat for SanDisk. If we look at Western Digital, Western Digital was up about $10 today, 2%, closed at 487. After hours is a little bit negative right now. So this is a new trend. These stocks were all kind of in the positive in the after hours. It look like they're shifting a little bit back towards the red right now. We'll see if that trend carries forward with Micron. But if you look at the bottom, Seagate's probably a little bit of a different story. Up $14.79 today. Closed just over $800 a share. Up right now over uh another $4.60, trading right about 807 a share. But it wasn't it wasn't everywhere that grew. If you just look right above it, you could see the picks and the shovels like lamb and applied materials. They didn't they didn't they weren't positive today. So this was a strong signal and a sign for the memory sector today. That's what we have to take away and there's some reasons for that in my opinion. I want to jump into that. But first, let's just take a look at the candle pattern chart that we see for Micron. And you can see right from the get-go, we had a strong gap up. This is probably what we would call a rounded top pattern throughout the technical chart today. We saw a nice gap up in the morning as you can see. felt some pressure right after we got through that right down to about midm morning or so and then conviction kind of stepped back in drove the stock up to the uh the high of the day which was just about $91 a share and then after that we definitely saw some profit taking throughout the afternoon we had a second story I mean we had the SKH heinix the chairman and he had some comments related around abnormally high memory prices and that they need to come down they need to normalize in the long term I think those comments honestly were just over interterpreted in the market alongside the profit taking. I think you saw some anxiety creep in with those commentaries and it just drove the prices lower as we got towards the end of the day. But then we did see some institutional support step in right at the closing bell. Look at the volume that you see down there below that last candle, that volume spike that jumps up in the last five minutes. 180, we'll call it 184,000 shares that crossed the print right at Micron at the if we jump over to the stock block trades just to show you some of the support that we saw throughout the day. There is that closing cross that I mentioned. So 1.7 billion right at the close just under just over 1.9 million shares right at 86546. That's not what jumps out to me though. It's the it's the other dark pool numbers that we see because if you look right above that at first we'll start off at the the four o'clock 14 seconds after the close you see 202 million just about just over 233,000 shares that crossed the tape. We also, if you go higher, you can see we had a uh at all the way up to 404, we had a 265 million, I'll call it 266 million print right at 86,546. Again, that's about 37,000 shares right at the end of the day. The last the top the top line there. So, the last major block trade that we saw today, but I think if you look earlier in the day, this is the one that intrigues me the most right here. It's at 1:10 in the afternoon. And I'm highlighting on the screen 400, we'll call it a half a billion dollars because it was that close. We're looking at 560,000 shares at $8.90 a share. So that was contingent. You can see in the far right. Most of these were in the dark pool overall. But this is a to me a strong signal. It's a bullish signal overall at 890 setting the the mark there. Overall I think we have sent a institutional floor at 865. We'll call it 8.66 8.65 65 just on everything we've seen today. Actually look at it as a kind of a distinctly distinctly bullish story because institutional money stepped in with that massive capital deployment to absorb retail intraday selling pressure and it pinned the stock above the closing price that we saw on Friday which was I think 8.48 or 8.49 a share. So we pinned it above that and we established a firm floor now at 865. We'll call Yeah, we'll just call it 865 and a half. It's 86546. So, we have a firm floor there as a as multiple dark prints came across and you can see that we carry this momentum into the after hours or into the pre-market overall. I believe that these dark prints, they do signal a strong kind of net bullish institutional accumulation. It shows me that the whales stepped back in as this stock was sliding down to to establish a for a floor and to establish support for the stock overall and there were some reasons for that. This is why I want to jump into the signals that we saw throughout the day today. So the first one I want to go into was the note from Morgan Stanley. You can see the title. It says selloff of US memory stocks create a compelling entry point. If we jump down into the article, you know, Morgan Stanley told her investors on Monday, oh, sorry, that it believes that the recent selling in the US memory presents a buying opportunity for investors, arguing that data center memory shortages continue to intensify even as mixed signals emerge elsewhere in the market. Mixed signals obviously referring to the PC and the consumer market, what we're seeing there. But they go on to say here that as Joe Joe Joseph Moore who was the analyst for Morgan Stanley in this second area that I have highlighted he said memory isn't the best riskreward in its coverage. He still views Nvidia and Broadcom as the best riskreward in the marketplace but he mentioned that memory is catching up fast in his opinion. He argued that this is not a normal cycle that memory has become increasingly the bottleneck as he phrases it due to AI builds and the agentic CPU builds. Morgan Stanley said that shortages continue to intensify with building with data center memory prices more than up their increase more than 25% in the third quarter overall. And finally, if we go down here, they noted that conversations, and this is an important piece here, guys, because this is what we'll be listening for tomorrow, excuse me, on Wednesday with uh Google and then next week with the other hyperscalers, but Morgan Stanley noted that the conversations with data center purchasing contacts last week showed showed uh a shortage intensity. no sign of that abading in the marketplace with prices up at least 25% quarter over-arter uh above both Morgan Stanley and 30 third party estimates. And this last line here, I love seeing the firm in this case Morgan Stanley added that long-term concerns about memory shortages intensifying in 27 and 28 are as strong as ever. So that should give us just a strong sense of conviction that the shortages are not going away. We are not going to see a supply glut. Even Morgan Stanley calls it out. I'm going to show you some more articles that even demonstrate that further. I hope this kind of puts the bears to rest a little bit because the demand is significantly outstripping supply in the marketplace. And as I've said many times, the fundamentals for these businesses are incredibly strong. I invest in businesses with strong fundamentals. I don't invest in price action that that swings one day or the other. Some may. I'm not a day trader. I'm a long-term investor and that's why I have such bullish in this sector overall still. But let's jump to the next one because the next one is from Key Bank and Key Bank reiterates its overweight on Micron keeps its price target at 1750 today. If we scroll down here, I can show you the reasons why. So Key Bank reiterated an overweight rating on this on the stock. It's 1750 price target and it's all based on the pricing that they see. So they project that DRAM pricing will increase 15 to 20% quarter over quarter in the third quarter of this year and 15% in the fourth quarter of this year and that's following as they mentioned a 45 to 55% increase in the second quarter. NAND pricing which Micron is also a significant supplier a key supplier within NAND as well. It's expected to rise 30 to 40% in the third quarter this year with a 15% increase in the fourth quarter. And guys that's over a 75% increase that we saw in the second quarter. So this signal is not only bullish for Micron but it's bullish for SanDisk as well for you guys holding SanDisk out there. And I know I haven't spoken about the other memory stocks in a while. I've been hyperfocused on Micron. Part of that is because I believe Micron is the bell weather for this entire sector. As Micron moves, the others move as well. I just think it is the bell weather for the for the memory group and that's why I focus on it. I probably have the most most of my position is in this company as well to be full transparent. So that's also why I focus on it. But I will I promise get back to covering SanDisk, Western Digital, and Seagate with a little more depth in future videos as well. But if you jump down, the other piece I wanted to call out here from Keybank is they expect Micron to benefit from from high band from HBM price resets in the first quarter of 2027. HBM4 pricing is projected to increase approximately 100% year-over-year. And HBM 3 is going to increase 150% year-over-year. Now, we saw in yesterday's video, they're already showing that HBM4 it is shipping faster. We're seeing a slowdown with HBM3e. HBM4 is starting to ramp up significantly. We know Micron is ramping up their supply. They've already booked a billion dollars in business in HBM4, but a 100% increase year-over-year. Again, that is going to drive significant pricing power for this manufacturer, for Micron, and for the marketplace. But Key Bank and the last piece here does not expect industry conditions to loosen until 2028 as clean rooms expansions will not begin contributing capacity until the second half of 2027. So this is what we've mentioned and I've said in the comments if this if we were in the second half of 27 and the early of 2028 and we were having this conversation about are we hitting a structural peak, I could understand. But in the in the middle of 2026, based on the demand and based on everything we see in the market, that is a premature conversation to have. We are nowhere near a structural peak for this sector in my opinion. I want to jump over I think that's the last piece. The next one I want to cover for you guys is I want to jump over to UBS because this is a a very interesting one. And if I want to go through here because I think it has a little more impact and meaning than others, but UBS, they also raised their price target on Micron today. They're citing it's all based on the expected free cash flow generation for Micron in the coming years. So analyst Timothy Auria, which many of us are very familiar with on this channel, he said Micron is set to generate more than 400 billion in free cash flow through calendar year 2028. 400 billion. Put that into context. The company generated 26.2 billion in levered free cash flow over the last 12 months. The company as we know remains restricted from share purchases repurchases through December 9th of this year. After that date though they are speculating that Micron could potentially use all of its free cash flow to buy back stock. BS they increased the price target for Micron projecting the company will generate as they mentioned 400 billion in free cash flow by 2028 and they are they have moved their price target. Well, Key Bank reiterated them as an overweight with a 1750. I I can't remember what the price target was for UBS. I'll have to look it up. Didn't mention it here, but it's essentially all based on this uh this buyback program. And I want you to remember this. I kind of just kind of thought about what was another company that recently did a buyback program that had an impact. Now, I I thought of Meta. Now, that was in 2024. You guys may know some that are sooner. I just couldn't think of it as I was preparing for this video. But on February 1st of 2024, Meta announced that it was doing a $50 million in buyback. So when you combine that with the strong earnings that we saw, we saw significant stock uh price movement because you see the supply in the market come down when it's pulled out. This drives up earnings per share because you're seeing less float in the market as the company buys back the stock. Each each Inville stock that's still out in the market is just worth more. It's a simple supply and demand piece overall. But when Meta did it back in 2024, their stock went from 394 and I think within a couple days guys, it jumped to 475 and within a few months it was up over 500. Now that was on top of the strong earnings they also delivered. But you could see the impact. It drove upward pressure for the stock price. If Micron does this as well towards the end of the year, on top of the strong earnings that they're going to drop this year, it will drive strong price earnings overall. So, I believe it will be a signal that also will help this stock reach those price targets that I believe it will reach by the end of the year, which is around that $1,500 to $1,550 mark. So, this was a key sign. Now, I want to jump to the two stories that I found interesting. So, this one was the one that I felt was just misinterpreted. If you look at the headline, you can see why. SK SK Group chairman says abnormal memory prices should fall. AI chip demand seen up by 60 to 100% next year. So when you just take that in context and we know sometimes the news media they just run with these headlines without giving the proper context to the entire investing community when you see SK chairman says that abnormal memory prices should fall that probably drives some algorithmic selling when they pick up that headline there's fear anxiety associated with that and it drives the stock down overall but let's look actually what he said in that in that article because I think when I look at it I interpret it wasn't uh bearish. It actually was kind of bullish surprisingly for this for the stock because what he actually said and you can see in the screen it was first it was related to kind of demand explosion. So he did confirm that memory prices are high because demand is outstripping supply capacity. We know that. But he he said demand for AI semiconductors is projected to surge 60 to 100% in 2027 versus this year with the broader memory market expanding 50 to 60% as well. He also acknowledged that memory producers have virtually no substantial capacity expansion coming online next year and it's creating panic level supply demand gap in the market. And finally, the chairman did say that he warned that while prices weigh on downstream PC and mobile makers that expanding advanced memory production takes massive clean room times, massive clean room time, excuse me, equipment and skilled labor and we are not going to be able to meet that demand anytime soon. And this is why we also saw that their CEO when he me when he echoed in a prior report that the memory industry is heading for its worst supply shortage in history next year and that we're going to see just demand continue to outstrip supply all the way through 2030. So in short, the SK group, it isn't cutting prices as you would think about the article over there. They're admitting that they're sold out and they cannot build fabs fast enough to satisfy the hyperscaler demand that we're seeing in the marketplace. So this was inter misinterpreted the marketplace this article if you look at it if you want to pull up trend force and read it I encourage you to because in actuality in my opinion it is a bullish sentiment for the sector. And then I want to get to the last one which also was an interesting one because we heard so much about the Kimmy K3 the frontier model and how it was just going to just demolish demand that this was essentially it was over the memory sector was over when China launches this and and I've heard that same sentiment with CXMT as well and I think sometimes I think we just need to slow down in this sector. TurboQuant was the same way. Just emotional reaction to what we hear. And maybe it's the anxiety that we just feel that the the sector is too good and the rug is going to be pulled out from us at any moment. But I feel like Kimmy 3 K3 was the same exact way. So I want to cover these articles with you because this one was interesting. The top three AI stocks to buy as Kimmy K3 reshapes chip design. I won't go through all three. The first one is 10 cent uh and they mentioned but the second one is micron essentially it's the memory super cycle catalyst. So they go through the data for micron you can see here and they say the arith the arithmetic is staggering. Running a 2.8 uh terabyte perimeter model at infant scale requires enormous high bandwidth memory. Every openweight release of frontier model, every openweight release of a frontier model like K3 increases global inference compute demand and Micron's HBM3e is at the center of that stack. Now that's one article, but this is the pick number two that has probably the the biggest opportunity based on on this roll out of Kimmy K3. Man, that was way different feeling than what we saw on the comments because everybody mentioned that this was just going to crush demand and I think we just got a little ahead of ourselves or those commentary comments in the in the community got a little ahead of itself. But I also pulled up this article because I it wasn't just one source. Semi analysis also confirmed this and this was out yesterday. But they say Timmy K3's mechanism improves attention efficiency but it will require excuse me but it will require more GPUs HBM DRAM and networking not less. So bullish signs for the sector overall guys not not a total loss of sector and we'll go through some of it but semi-analysts recently offered a snarkling contrasting view the massive perimeter count inference architecture required requirements of K3 will not weaken demand for high-end AR high-end AI hardware on the contrary they further reinforce demand for Nvidia's high-end GPUs HPM and high-speed interconnect solutions so think about the optical players there that going to benefit benefit from this. So, Coherent, Lummentum, Corning, Applied Operics as well. You may see uh Arista as well playing there, but these are a bullish sign for these companies overall. Semi noted that K3 has over 2.8 trillion parameters and requires more than 1.5 terabytes of HPM to store its model weights. As we go down, I'll just call it the last one. More efficient model architecture lowers AI inference costs. So, this is Jebid's paradox. all over again becomes more efficient, more widely used, and ultimately it is going to drive more long-term demand in semi analysis opinion for GPUs, HPM, and DRAM and network infrastructure. So guys, those are some huge stories that we saw today in the sector. Very bullish in my opinion. I know I covered a lot in today's video. We went through a lot. But I think when you look at the price action that we saw today with Micron, Sandisk, Western Digital, and Seagate, it all confirmed that the institutional buyers are treating these dips as buying opportunities. It was supported by that $ 1.7 billion dollar closing cross that we saw today for Micron. Morgan Stalin confirming that third quarter price hikes are over 25%. Key Bank is targeting a 1750 price target for Micron because HBM4 price reset and UBS is mapping out a path for a 40% share reduction via the $400 billion in free cash flow that Micron is going to generate by year 2028. So today's green candles in my opinion they don't prove that the bottom is in. But today's data does reinforce something even more important. Despite the weeks of selling that we've seen, I still haven't seen fundamental evidence that the AI AI memory bottleneck is breaking. That's what I'll continue to watch. That's what I'll continue to track on this channel for each and every one of you. And if that evidence change, you'll it changes, you guys will be the first to know. But let me know your comments. Sorry for being a little longer tonight. There was a lot of data to get through. But I hope you enjoyed the video. See you next one.