The Micron Selloff Is ABSURD! Micron Is MAJORLY Undervalued!

Micron just experienced the hottest earnings print in its history and yet the stock fell by almost 5%. Why in the world would Micron drop after seeing a $54 billion revenue quarter, which was a 5% beat from what we expected at 51%. In today's video, I'm going to share with you why Micron dropped, why this is not something that should scare you if you're a long-term investor. why my investment in Micron is still one that I'm extremely convicted in and why I still believe that Micron is in a fantastic place to be accumulating. If you find value in this video, consider signing up for the CryptoJet Research Desk where you can get access to all of our research and continuing this conversation after the video is over. More on that later. Let's get started. Micron printed earnings yesterday after the bell and we came in at $54 billion of revenue against $51.33 billion estimated. This was a 5.64% beat, which is fantastic. The issue, and the reason that Micron went through a drop here, was because the last two earnings delivered much larger surprises on revenue. In Q2's earnings, we saw a 19.5% beat. Here in Q3's earnings, we saw a 15.4% beat. On this earnings, we only saw a 5.64% beat. But that's something that we need to consider. The reason that Micron dropped was because people were anticipating a 10 to 15% beat and that didn't happen which caused the stock price to sell off slightly in the early morning hours of today's trading day. We opened around 1,053 and right now at the time of recording this at 10:18 Eastern uh Micron is currently sitting at,32. But this is not actually the bearish story that you think it is. Micron selling off in the pre-market and also selling off early on today is simply a matter of the surprise not being as large as people think. But obviously, Micron can't just go completely parabolic on earnings forever. And we also shouldn't forget that earnings still came back at 54 billion compared to last quarter's 41 billion. At strictly speaking, we added $13 billion of revenue quarter over-arter, which is amazing. Earnings per share came back at $33. Whereas in the last quarter, they came back at 25, which means that even though we had a sell-off this morning, Ford multiple compression is still taking place. Right now, Micron's 4PE is looking around six to eight, which is still exceptionally small. It's still exceptionally conservative. The reason that the forward multiple, the reason that the valuation on Micron is so low is because many people still anticipate that the old memory cycles are going to come back and supply is going to outstrip demand. Memory companies are going to lose their pricing power and Micron, Skhinx, and Samsung are going to go through a massive crash. This is something that we've seen in the past with personal electronics and cloud computing where we would see an enormous amount of buildout as these companies started to make so much money during these massive buildouts. They they'd just bring online a ton of new fabs and then they just have supply sitting on the floor. So they'd lose their purchasing power and you would see the stock price drop by 75% over the course of 2 years. This is why the market is only giving Micron a 6x forward multiple. But that's not something that can sustain for very long because of one very important factor. You need to understand that before artificial intelligence, before the great civilizational cognition explosion began, the end consumer of Micron's memory were humans. There were only so many people that could buy a laptop with Micron's memory in it. There were only so many people that could demand a server from a cloud computing provider. There was only so much demand because there were a finite amount of humans. In the modern era with the buildout of machine cognition, AI essentially has unlimited demand for memory. Now there are some caveats here. The companies that are building out AI there they do have limits to how much they can demand memory because obviously they only have so much capital. But artificial intelligence theoretically can replicate itself instantaneously for as long as it has hardware. Humans take uh give or take about 20 years from conception to reaching adulthood to actually replicate themselves. It takes much longer to grow the human population that was demanding memory before 2022 than it does right now for the artificial intelligence population to demand memory as it does right now. And that's why the growth curve of AI is just exponential on the demand side. Whereas the growth curve from the supply side is much more linear. Micron is increasing supply, but as we've modeled in our research many times, the growth of demand is substantially outpacing the growth of supply. We can look out over the next 3 to 5 years, see all the fabs that SKH and Micron are building, and we're looking at possibly up to a quadrupling of the supply over the next four years, but if we look at the expected demand growth of artificial intelligence and memory, we're actually looking at the demand for AI uh compute and memory in general increasing by over 10x. So, even though a lot of new supplies coming online, we're entering into a super cycle. This is not a memory cycle. And this print just goes to prove it. Even though it wasn't the beat that people were hoping for, we still added 14 billion of revenue in one quarter. 54 billion compared to 41 billion, 13 billion in a quarter. That is phenomenal. And it shows us that the memory cycle is continuing to expand, which means that your Micron just got even cheaper. As the price goes down and the revenue goes up, the Ford multiple compresses and it becomes an even stronger buy. So, what does that mean? That means that right now Micron is a stronger buy today than it was yesterday. And yet people are selling it. Those are the traders selling it. The people that understand the long-term thesis. The people that watch our channel are not selling Micron right now because they understand that Micron just got stronger. But I want to share with you some quotes that will help you to understand this. Before I do, I do just want to give a big shout out to the research desk. If you haven't already joined our Discord server, I heavily encourage you to do that. Get access to our proprietary research, our ratings, our signals. Get access to me, the analyst. Pick my brain, ask me questions. I will help you to understand all of this. The research desk is the best place to do that. Make sure that you sign up with the link in the description box down below. Our goal is to help you not make expensive mistakes. This is obviously it's not literally insurance. But think of this as your catastrophic plan to stop you from making dumb decisions with your portfolio. We're going to help you make better decisions and make better investments in Bitcoin, AI, semiconductors, memory, all of those different realms. But let's go ahead and talk and you can get access to that with the first link in the description box down below. Anyway, let's go ahead and talk about some key quotes that help us to understand why memory is indeed in a super cycle. So, in no particular order, I just want to read some quotes from different executives um at Micron. Micron executives, I believe this was Sanjay Mahotra actually, the CEO. Yes, it was said more than 75% of our output is already committed for 2027. Think about that before I even read the rest of the quote. Just just think about that for a second. Imagine you're a company. I run a company. We we have products, right? Imagine you're a company and 75% of everything you're going to produce next year is already sold. You have not received the revenue yet for it, but everyone who's going to buy it has already agreed to buy it at a floor price, and they are contracted that they don't have a choice. They can't back out of it. They are legally obligated to buy that memory. 75% of everything you're going to make in 2027 is already sold. My goodness. And people are selling the stock. I don't get it. I don't understand. More than 75% of our output is already committed for 2027. And the majority of discussions with our customers today are already around 2028. Overall, the industry demand and supply environment and the outlook is in a very healthy place here. He added, "What you need to understand is that companies have something that we track called pricing power. What is pricing power? Let me just use one of our products. For example, I have the ability to charge $99 a month or $1,000 a year for our research desk. Why do I have the pricing power to do that?" Because if you have a million dollar portfolio and you make a 1% mistake, that just cost you 10 grand. If I can help you on a $250,000 portfolio, not make a 1% mistake, then that saves you 2500 bucks. That's why I can charge 99 bucks a month because our information is actually that valuable. I have pricing power. I have the ability to charge that and people will pay it because it's worth that much. That's what pricing power is. And that's exactly what Micron is saying here. They have so much demand. They have so much demand that they have basically unlimited pricing power. They have the ability to charge whatever they want because there is so much demand and because it's so difficult to bring new supply online. Bringing a new fab online takes years. normally takes about two to four years from when you make the decision to when it's actually creating output. They have an enormous amount of pricing power and if you look at their gross profit margins, they're sitting up at like 86%. It's ridiculous. It's absolutely absurd. Now, let's read some other quotes here that are also useful. Sanjay Makertra, and this is a really funny article from PC Gamer, basically saying, "Okay, we get it already. Stop saying it." But honestly, Sanjay should be saying this over and over again. Here's a couple of quotes that I want to read to you. We expect memory shortage, memory and storage, sorry, supply and demand conditions to be much tighter in calendar year 2027 and 2028 than they were in 2026. By the way, 2026 was basically completely sold out by like month two, maybe month three. That that's how tight it was. Everything that was going to be sold in 2026 was basically already committed like a year ago, almost like six six eight months ago. So, if there if it's going to be tighter in 27 and 2028, prices skyrocket and they're probably going to stay there for a long time. To be honest with you, AI monetization, that's a whole different topic. We're going to talk about in other content. The rate that companies are making money on AI is ridiculous. Copilot, which is Microsoft's AI, increased the number of seats that it has from 20 million to 30 million in one quarter. They increased their run rate by 50% in a quarter. That's insane. That's absolutely ridiculous. The amount of money that is being generated from artificial intelligence is absurd. People keep talking about, "Oh, AI is not going to make as much money next year as it." That's just ridiculous. There's no logic. There's no factual basis behind that whatsoever. The buildout of AI is the most durable long-term super cycle in the history of mankind. Literally, there's just there's no second there's no other way to put it. And so when he says that memory uh and storage supply and demand conditions will be much tighter in 2027 and 2028, not just next year, but the year after as well. He's right. He's absolutely right. Which means Micron has durable long-term pricing power. We do not need to sit here and worry about whether or not Micron is going to be able to print massive revenue, massive earnings per share in 27 and 2028. You read the quote right here. And by the way, I understand Sanjay is the CEO. Obviously, he's got an he's got an incentive to say these things, but he's absolutely right, and the data backs him up. He's totally accurate. He also said, as we noted in calendar year 2027 as well as 2028, we see demand exceeding supply. He also said this, we have shared with you that we do not see line of sight for when supply catches up with demand. So, he's looking several years out, supply is not able to catch up with demand pretty much ever. It's just if you watched our SKH Highix video on Monday, whenever that came out, we talked about how the SKHX high bandwidth memory that's sitting right next to the NVIDIA logic die is four times as expensive. The memory costs four times as much on the chip side of things. Not the server rack side of things, not the accelerator side of things, but on the die itself. The memory in general costs four times as much as the GPU that is sitting right next to. That's insane, and it's not going to change anytime soon. So, should you be freaking out and saying, "Oh my goodness, the beat wasn't as big as it could have been. Oh, I should have seen a 15% beat. I wanted $60 billion of revenue, not 54." Do like, do you realize that the only reason that Bitcoin, sorry, that Micron is selling off right now is because people were pricing in 10 to 15%. They didn't get it, so they're selling off. That's not a big deal. That's not the problem. There's no issue here. This is great news. The four multiple on Micron has continued to compress. So, our long-term rating on Micron is one of accumulate. And this earnings release just shows us even more reason why we should be considering Micron as an accumulate. What does that mean? In our firm's lingo, accumulate basically just means that if you have investable capital, you look at the names that are in the accumulation that that have an accumulate rating first. You don't buy things that are on a trim. You don't buy things that are on a hold. You buy things that are on accumulate. Micron is very firmly in accumulation right now. And if you want to get access to all of our different signals, all of our different research, all of our different ratings, I heavily encourage you to sign up for the CryptoJ Discord server, get access to our research desk, our proprietary research, our entire proprietary system that helps you understand how to manage a portfolio, how to build wealth, what to invest in, where to invest in it. Not financial advice, but we are going to give you a very strong framework so that you can build wealth. And the best place to do that, like I said, is with the link in the description box down below. Sign up for the CryptoJet research desk. Get access to the Discord. Get access to our calls with analysts. Get access to breaking news, worldview thesis, all of these different products. At the end of the day, our job is to help you not make a catastrophic mistake and also not miss amazing opportunities. And that's exactly what we're going to do. So, make sure that you sign up. Uh if you enjoy today's video, make sure to hit that like button, subscribe to the channel, share with somebody who might find value in it, and stay tuned as we continue our coverage on memory stocks. My name has been Jeff McAfee. Peace.