MU, SNDK Bull Case in Backlog & Easing Supply Woes After Stellar Stock Rally

Micron a similar story we're down more than 20% from its all time highs for what's next in this space. Let's bring in our panel. Joining us today, editor managing partner at Chatwood Investments, and Bob Lang, chief analyst and founder over at Explosive Options. Bob, let's start with you. I mean, memory stocks have been extraordinary. I just highlighted the moves from SanDisk. It's up more than 500% year to date. Micron I think is up more than 200%. Even with that pullback and being off of these highs, how are you looking at this trade. Are we at the beginning of a much bigger cycle here. Have we reached a point where investors are perhaps pricing in too much good news. How are you looking at it. Great to see you on a Friday here Marley. So I'll tell you what I, I think that there's a little bit more to be had in these stocks going forward. And if you if you believe in the cycle theory, these companies tend to cycle up and down. They call it boom and bust. And when they when they peak, generally speaking, margins are around the 55 to 65% level currently. Right now we're sitting at about 80 to 85% for some of these companies. It's really unprecedented for commodity item like Dram or even memory to have to boast those kind of margins at this point in the cycle. But if you're to believe that what micron CEO said the other day and the SanDisk CEO said after earnings a couple of weeks ago that there's plenty of demand in the pipeline. And once they get a hold of the the inventory, the supply, that things are going to get more balanced, that, you know, it could last until 2029, 2030. All right. So let's dive in to some of these names. And let's talk about micron. You have a $1,500 price target on micron. That's roughly 50% above where it trades right now. A little bit less than that, but pretty close. What specifically gets micron to that valuation. Their their backlog. I mean they are not able to keep up with the demand that they have. And that's that is a absolutely perfect chemistry if you want to call it for a stock price going higher when you when you have orders on the books and you can't get to them, that that is wonderful for that company. And micron is only able to kind of produce about 50% of what it is that they have on the books for needs. So 2027 is going to be another stellar year for micron and Bob. How constrained is the memory market? I mean, how long can the supply shortage realistically last? We do have some visibility from these names in terms of what they can provide all very similar messaging in terms of that, we can't meet the demand. But realistically, how long can this last? And also, do you still view this business as cyclical? Because there have been some arguments made to me that perhaps we have exited that for a period of time here with this bottleneck. Well, I'll tell you what. I heard Elon Musk say something, made some comments to Sanjay Malhotra, who is the CEO from micron, and he said something like, I would like to buy every single piece of inventory that you have, every single piece and don't give anything to any of your other customers. And it obviously that was a little facetious. He was joking about it, half joking probably, but I think that Sanjay said that every single one of his customers have said the same thing. They would like to get a hold of, of all the inventory that they that they have on hand and keep it for themselves and use it for their, for their, for their creations of their, of their products. So I think that this cycle can last a little bit longer here. And, and do I think that the cycle is different? No, I don't think it's different. I just think it's extended out a little bit morally, a little bit further than most people had expected. And once we get into 20, 30, 20, 31, we get into a new evolution, a new wave of AI. We'll be able to find out more about how important memory is to, to AI. According to the CEOs from the companies that we talked about, SanDisk, micron, Seagate and Western Digital, they're saying that memory is is absolutely critical for AI going forward. So if AI is part of our future Mali, then, you know, it's times are different today than they were used to be. It would be hard to make an argument that it's not a part of our future. But last question to you. If you could only own one name in this memory space, who would it be and why? It would be SK Hynek. They represent 50% of the HBM. That's the high bandwidth memory, and they are the winner right now. Everyone just thinks of micron, but you can't forget about the South Korean company that owns 50% of the HBM market. That would be the winner to me. All right. SK Hynix your winner today. SK Hynix trading a little bit higher on the session along with micron down a little bit. About 4/10 of a percent. And SanDisk just marginally really appreciate you both being with us. To take a closer look at the memory names. And Bartowski managing partner at Chatwood