---
title: 'WARNING: Micron is about to FLIP the Chip Market'
source: 'https://youtube.com/watch?v=WTFGa5dKN5U'
video_id: 'WTFGa5dKN5U'
date: 2026-07-01
duration_sec: 1374
---

# WARNING: Micron is about to FLIP the Chip Market

> Source: [WARNING: Micron is about to FLIP the Chip Market](https://youtube.com/watch?v=WTFGa5dKN5U)

## Summary

Micron's upcoming earnings report on Wednesday could be a pivotal moment for the chip market. The company is expected to beat guidance, but its explosive growth is driven almost entirely by price hikes rather than volume increases—a dynamic that may not last. This analysis breaks down the key numbers, risks, and long-term outlook for Micron and the broader hardware narrative.

### Key Points

- **Earnings Beat Expectations** [01:29] — Micron is expected to beat its own guidance by about 18%, with consensus estimating a 13% beat. A miss could trigger a sell-off similar to Broadcom's post-earnings drop.
- **Price Realization Driving Growth** [02:42] — DRAM prices surged 65% quarter-over-quarter while shipments grew only 7%. NAND prices rose 75% of an 82% revenue increase. The company is milking pricing power during a shortage.
- **AI Narrative Is the Only Growth Driver** [05:36] — Mobile, automotive, and consumer segments are declining in shipments. Only the AI-driven data center demand is propping up prices and revenue.
- **Valuation Looks Cheap on Forward Earnings** [06:04] — With a forward PE of 19.2 and expected 18% annual growth, Micron's PEG ratio is 1.03. UBS sees potential for the stock to double to $2,500 per share.
- **Quarterly Price Hikes Are Insane** [10:23] — In just three months, Micron raised DRAM prices by 65% and NAND prices by 75%. Shipments grew only 7% for DRAM, confirming price is the main lever.
- **Risk Factors: Token Maxing and Model Efficiency** [12:42] — Meta, Microsoft, and Walmart are curbing token-maxing behavior. Switching to cheaper models like DeepSeek could slash AI compute costs by 95%, reducing chip demand.
- **Supply Expansion Coming in 2027-2028** [15:00] — Micron is building new fabs in Singapore and Idaho, with three facilities coming online between mid-2027 and end-2028. This will flood the market with supply and likely end pricing power.
- **Short-Term Bullish, Long-Term Cautious** [21:00] — The hardware rally isn't over yet. Micron's strong balance sheet and debt paydown make it a buy-the-dip candidate for the next year, but 2027 could mark a rollover.

## Transcript

All right. Hey everyone, welcome on
back. We got to talk Micron because
Micron earnings are coming up on
Wednesday and frankly they could make or
break the market. So, not everybody here
might be invested in Micron or maybe you
are and you've absolutely been killing
it on the investment. Uh, in this video
we're going to be pretty neutral on the
actual stock itself. I'm just going to
give you some facts here and we're going
to use those facts to understand what's
going on in the broader industry and how
this could affect the broader well
frankly hardware narrative given that
hardware is clearly what's been running
since uh we had our original beginning
of April ceasefire if you want to call
it that. Uh and then of course uh since
then we've been looking for a broadening
out. Uh we had these pits and starts of
software a couple times. Those haven't
really gone anywhere. Uh we had finance
last week that did really well,
specifically Robin Hood. But
consistently, it's hardware stocks that
keep winning, including Micron uh and uh
SanDisk, of course. But even outside of
these memory plays, you've got companies
like Marll, which was one of our course
member favorites. Remember, you can
always join over at mekevin.com. Use
that coupon code pope. You can see why
on uh on Instagram or on uh on Twitter.
But anyway, uh Marll's done
fantastically. I mean, we're at alltime
highs now at 310 and we were even higher
than that intraday uh last day the
market was open. But for now, let's
focus on Micron and talk about some of
these earnings expectations. What's
going on there? So, uh first of all,
we're expecting to beat the guidance
that Micron gave by about 18%. The
consensus estimate is only a beat of
about 13%.
But they'll probably beat, which is
good. You want that. You actually don't
want them to miss on any component at
all because then you might end up
pulling off a Broadcom. Broadcom had
pretty much across the board beats, but
the timing of some of their custom chip
revenue and Broadcom does a lot of AS6
as well like Marll. The timing of some
of their custom chip chip revenue kind
of got delayed. And so one of their
their their next forecast quarter
revenue was a slight miss compared to
expectations. And the stock still hasn't
recovered. it was down like 20% after
earnings. Uh, and you know, now it's
still down about 14% from their
earnings. So, even though their earnings
were pretty dang freaking good and the
company's booming, it you know,
honestly, for long-term buyers, it
created a dip opportunity for Broadcom,
even a slight miss can really tank some
of these really uh big momentum movers,
if you will. It doesn't take a lot to
move these, so to speak. Uh so we're
expecting a beat on top of expectations
that are already expecting a beat. Uh
and the biggest driver that you have at
uh Micron right now is really price
realization. And I think that's really
important to understand when you're
looking at an investment into Micron. So
I'm going to read you some uh notes here
directly from their last quarterly
report. they have an increase of uh
year-over-year increase of DRAM supply
of 40% and nan supply of 30%. Or
shipments, I should say, rather than
supply. That's a pretty good
year-over-year increase in shipments,
right? But price is actually going up at
a percentage of about 115% on DRAM and
about 100% on NAND. So in other words,
you are growing price way faster than
you are actually growing shipments,
which is very common during a shortage
environment. Now, something to think
about if you hear NAND and DRAM, I'm not
going to go super into the weeds here.
I'm going to give you a very, very basic
uh difference of the two. The way I like
to think of the two is I like to think
of NAND maintains memory when the chips
are turned off. So, the power is turned
off. When is that useful? A lot of
agentic AI applications. I don't want to
have to reload all of my agentic AI
context every time the darn thing
respawns. I shouldn't say respawns,
restarts. I'm in like a video game
mindset even though I'm here in like a
real life MMO. A lot of NPCs out here. I
shouldn't say that. Uh but anyway, DRAM
uh is really really powerful all the
time when it's on, but it basically
wipes your memory when it's off. That's
a very very simplified explanation of
the difference. Uh and of course they've
got four core business units. You've got
the core memory business unit. That's
for like hypers scale cloud. Obviously
that's where we're getting big spend
right now at data centers for Micro. Uh
then of course you've got sort of the
original data center business. Think
storage. Think uh the original
components inside of Dell racks and
storing information. Google Drive,
Amazon Cloud, right? like that sort of
core original uh data center stuff. And
then you've got mobile, automotive and
industrial and consumer sectors. So
think mobile phones, think you know
memory chips that are going into your
dishwasher or your uh you know your
refrigerator or your washing machine or
into your cars, you know, your seat
settings like basic things like that.
Really basic chips. Those sectors, by
the way, the last two, automotive,
industrial, consumer, and these are
bundled into two. I'm listing them out
into a little bit more. and mobile those
are actually declining which is very
interesting. So uh even though prices
are going up in all of the sectors
shipments are down in mobile and
enterprise those other categories. So
it's really just the AI narrative that's
driving chip prices right now. Uh and so
anything that would soften uh the hope
that this exponential growth of the
chart of Micron is going to keep going
is going to be a really big risk factor
for the stock especially with how high
it's run in the near term. Now the thing
is even though at $1,100
it seems like it's run up an insane
amount because of the Wall Street
forecast for this company it's actually
cheap. like UBS prices it in as having a
potential double.
I don't actually think they're wrong,
which is crazy to say, but right now the
KPEG I have for them is 1.03, which
means they could easily justify a
valuation that is uh probably closer to
2 and a half times this, somewhere
closer to $2,500 a share. But there's
going to be a lot of volatility between
here and there, both to the upside and
to the downside is my expectation. Now,
uh that's pretty incredible and I'll
give you the components as to what makes
up that so you could understand uh why
that uh you know we we would come to
such a valuation. Uh it has to do with
an expected earnings per share at the
end of this year of $59 per share which
originally when we look at that and we
divide their current price by 59 we're
like okay wait a minute oh that's
actually not that high. That's only 19.2
times earnings. Yeah. Like these people
are printing money even though that
stick is you know the chart is hockey
stick so much because they're printing
money they are printing so much that
they're only selling for 19.2 times
earnings. On top of that their growth is
expected to be about 18% per year over
the next four years. So that gets you
pretty close to about a one price to
earnings growth ratio. Now, if you look
at like trailing, the numbers are going
to be different. But when you look at
these forward projections, yeah, the
projections actually suggest the stock
is cheap. And this is why the most
sensitive thing you could look at would
be anything that would hurt those
projections. Now, I just want to shout
something out really quickly that's a
totally free feature. Uh it's called our
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Uh, so if you download the Meet Kevin
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shot? Give us some feedback. Let us know
what you think. But anyway, let's focus
some more on Micron. So those are the
EPS projections and the growth
projections. Any kind of red flag here
that could tank the stock would be any
kind of slowing in average selling
prices. Any kind of slowing in order
growth, obviously missed targets, but
again to me, this is a co era toilet
paper seller. They're selling toilet
paper when everybody wants toilet paper.
There's not enough toilet paper. This is
not trying to be an insult uh to the
company. The company knows this
themselves. They literally warn in their
filings that most of their cash flow
right now is coming from price
realization, not because they're
delivering more product. They realize
that. Like if you literally look at
their quarter overquarter numbers,
you'll see how extreme it is. So I'll go
over here to quarter over quarter. I
wish I could share the screen screen in
my studio and just show it to you. So uh
you if you're a course member, you could
see it. It's under the stock tab. All of
these are all this data is under the uh
stock tab. But what I want you to think
about is this very next quarter. Oh, I
don't even know if I screenshotted it.
Let me screenshot it to make sure it
goes in there. But anyway, it's from the
quarterly report. Ah, yeah, here it is.
Okay, great. Oh, okay. Perfect. Yep,
right here. So, uh, we've got sales of
DRAM products increased 74%.
But price increased about 65%.
That means that's quarter over quarter.
So, in a three-month span, they
literally hiked prices about 65% in a
span of three months. This is an insane
shortage. Part of that is what we saw
after Claude um uh co- co-work really
went crazy. I shouldn't say Claude Co.
Um uh whatever. You know what I mean?
Claude Code, there we go. After Claude
Code really went crazy in Q1, uh prices
for everything. HBM's uh you know high
bandwidth memory but also H100s from
Nvidia had this massive surge in Q1 but
those prices have already started to
settle and that's one of the big
concerns we're worried about here for
Micron is we're already tracking H100
prices and they're still elevated but
they've come way off the peak that we
saw in the first quarter. Uh, and so
some of this price growth that they're
talking about here might not last, but I
mean, listen to this. They raised prices
on DRAM. Remember the one that works
really well all the time when it's
powered on, but it loses its memory when
it's turned off. Prices rose 65%.
And their actual shipments only grew
about 7 to Nish%.
So that's still good. You know,
shipments are still growing somewhere
around, you know, 32 to 36%. But most of
their money is being driven by price
because they can. It's sort of like,
wow, okay, let's try raising the price.
Wow, people are still paying it. Let's
try raising the price. Wow, people are
still paying it. Right? That's what
they're doing. And they're milking that
right now. Now, that does not last
forever. We know that. In fact, if you
know PP is too strong for too long, you
know, some say 4 hours, you need to go
visit the doctor. Okay. Anyway, uh the
same is happening actually on NAND
products. Nan products up 82% but 75% of
that was because of price. So yeah,
quantity is going up but most of the
growth is frankly price. Okay. Yeah. So
I did have this correct all um already
updated on the the stock uh terminal
side. Okay. Good. So uh let's now keep
going on to the the the broader risk
factors here. So any kind of cost
reductions at companies or increases in
supply are the big risk factors for a
company like this. So, some potential
headwinds are going to include the fact
that there are efforts now at Meta,
Microsoft, and companies like Walmart to
decrease this token maxing culture we've
gotten into. Meta last week told
employees that it would soon limit AI
use after seeing an exponential increase
in token maxing. I mean, in fairness,
they were a little looney. They went for
like, hey, let's have leaderboards and
see how many tokens people are using and
uh, you know, reward people based on
token maxing. And so people were
basically looping agents doing
essentially very little in the way of
productive work uh but maximizing their
token usage. That's pretty dumb. So
Meta's killing that. Walmart is killing
that. Microsoft is now considering
moving from OpenAI uh and Claude, mostly
like a chat GPT40 level for Microsoft
co-work and they're considering moving
to Deep Seek V4, which is like a huge
insult because now it means we're going
from American LLM providers to sort of
like a copycat and mega efficiency
version DeepSseek, which you know, we
highly expect DeepS basically trained
our versions by just training off of the
outputs of OpenAI. So kind of bypassing
all of the training that OpenAI did,
which is kind of brilliant, but also
very evil. But when you switch models,
you know, costs plummet. If you use
Sonnet, you literally save about uh 95%
of the cost that Opus costs over at
Claude, you know. So you use Claude
Opus, uh, you know, it costs you 20x
what Sonic costs. And if you use Kimmy,
which is a product from uh Moonshot AI,
which is another Chinese startup, that
costs you another 120th. So another 95%
cost reduction. So cost reduction is is
really a big key here. The more that we
see, the less we end up seeing in the
way of pricing power at chip
manufacturers, but that's all a
downstream effect, right? So that's why
we're so focused on their guidance
because we really think they're going to
be able to guide strong for probably at
least another year. Bloomberg
Intelligence thinks they're going to
have pricing power through the end of
the decade. I kind of doubt that. They
say there'll be limited supply between
now and likely 2029 to 2030 and they
expect higher pricing throughout 2027. I
agree throughout 2027 like getting into
next year. I agree with that all the way
to the end of the decade. I do not agree
with that and I'll explain why I don't
agree with that and it has to do with
the supply expansion uh in just a
moment. uh but uh efficiency in models
slowly even though it's model use is
exploding token use on a second
derivative we already know is declining
right so uh token use if you look at the
Google uh IO event we can see we went
from 2024 to 2025 50x increase in token
use now we're at about a 6.9x
increase in token use and that'll
probably keep declining in rate of
growth so as we then get away from token
maxing we'll see more of those declines
times and eventually these this pricing
power will fade over in chip companies.
That's a warning for all chip companies.
We know that. But for right now, things
are looking really good and the company
is trying to grow their capacity to
because they're a big manufacturer of
their own chips while they use uh third
parties. They do manufacture a lot right
now. They're paying down debt. Their
balance sheet is really good. They've
got plenty of cash to pay off all of
their debt right now. Uh and they are
actively paying down debt, which I think
is a very smart move. And I think they
know that. Uh, and even though they're
paying down debt, they're also still
blowing money on capex, expected to be
25 billion for the year, but they've
also already spent over 11 billion for
the first quarter. So, you know, I think
that they spent a lot already. You know,
almost half of their year's budget is
already spent in the first quarter. But,
you know, maybe that's just timing,
right? But anyway, part of the reason
they're expanding supply so much, and
this is why I don't think they'll make
it to the end of the decade with this
sort of pricing power, is they're
getting like $5.5 billion of subsidies
from New York State. And on top of that,
they get chips act 35% subsidies from
the Biden era chips act. Now, Donald
Trump has totally criticized the chip
chips act, but in the background, they
are actively running an office to manage
who gets doled out tax credits through
the chips act. So publicly, Trump bashes
anything other presidents do, but in the
background he's using it in a classic
Trumpian style to pick winners. We we
kind of know this is how Trump operates.
It's not a dish. It's just literally
calling it like it is. You know, uh it's
it's almost sort of like saying, "Hey,
can we get through a me Kevin video
without here's a coupon over Kevin?"
Now, in fairness, the price goes up over
time. We've increased the price again
and at the end of this month we're gonna
have another big price increase because
we're coming out with even more stuff.
Uh and and we are spending a lot on R&D.
So we're doing a lot to really give back
to the community and uh that actually
enables for those of you who don't want
to pay a dime, you using this alphire
service. I highly recommend you check it
out. Uh the alphire service is pretty
badass. Uh and let us know in the
comments what you think about it. If you
don't like it, delete the app and
uninstall it. But honestly, like I I
wouldn't shill something free uh like
this if I didn't think it was great and
you would be like, "Oh man, Kevin, yes,
this is actually good. Thank you." Like
really. Uh okay, so uh here's the
problem with the expansion of supply.
I'll go through this pretty quickly
here. Singapore high bandwidth memory
expansion uh coming online in calendar
2027. This is basically them saying
they're meaningfully expanding their
packaging for chips chip assembly uh for
high bandwidth memory in 27. So, we're
going to have a big increase in in their
Singapore plant for HBM that increases
supply on the top. Oh, wow. I just z I
didn't realize I zoomed out all the way.
Oh, that's interesting. I can I can
actually control the zoom from my phone.
That's kind of cool. Or my watch. That's
kind of cool. But the downside of that
is if you accidentally bump into it, you
make a mess of your your angle.
Hopefully, you didn't see uh you know,
up my pants here. What pants? Anyway, so
uh it works out. Anyway, um in September
of 2022, they started their Boise, Idaho
fab. Uh and they actually broke ground
in 2023. Guess when that comes online?
Mid 2027. Took about four years to
develop. So that means you're going to
have the Boise, Idaho Fab come online at
the same time as their Singapore fab is
expanding uh production. That's a lot
more supply. And mind you, this is just
Micron, right? Like the leader of memory
production is actually Samsung. And then
you've got SKHENX. Samsung sits about
38% market share. SKH Highex at 29%.
Micron's actually only at about 22%.
Now, something to keep in mind, they're
one of the smallers. Uh now, if you look
at uh their additional fab development,
they have a second fab in Idaho that
they're starting construction on this
year, like right now, and they expect
that to be online by the end of 2028. So
between the middle of 2027 and the 18
months thereafter, so middle of 27 to
the end of 28, you're going to have like
three fabs just from Micron coming
online to start trying to realize this
this, you know, price increase. Now, I
think that there's an indication they're
starting to try to rush these plants.
You know, their first one took about
four years. This next one's two and a
half years of development. Maybe it's
smaller, but to me, like if I were them,
I'd get it. Like, hey, prices are really
hot right now. Let's try to build these
as soon as we can so we can print like
make hay when the sun is shining. That's
why they're paying off debt. They're
really smart. At the same time they're
paying off debt. They're using cash flow
to build the machine. Very very smart.
Now in the near term, Apple did warn uh
that memory prices are going to uh
increase the cost of Apple products and
that's going to be unavoidable. I agree
for the next year that's probably
unavoidable. that could lead sales to
fall at Apple, which in my opinion will
drop the stock, which actually then
becomes a buying opportunity for Apple.
I think Apple is roughly fairly valued
right now. The upside isn't that great.
I'd love for them to get cheaper.
Honestly, I would love an opportunity to
get into Apple before they actually come
out with an AI product. I'd like to be
in it before they figure it out. Maybe
they will never figure it out. I suppose
that's a risk, but I'm not in it right
now. But anyway, so you've got these
expansions of these facilities to keep
in mind. their GNA isn't really moving,
which is, you know, just indicates
they're really able to scale what they
have right now. They do warn that uh
cash from operations is highly dependent
on selling prices, which are extremely
volatile. We know that. That's why
they're on the moon cycle right now
because everything's just skyrocketing.
But the durableness of those price
increases will almost certainly fade.
It's just a matter of like does supply
ramp first to reduce that pricing or
does demand slow down first or worse,
both. When both supply increases and
demand falls, this stock will absolutely
tank really fast. It's gonna suck. Like,
I would not want to hold this stock for
the next 10 years. I would want to hold
this stock potentially for the next
year, especially if it tanks after
earnings. They've got 53,000 employees,
which is actually pretty impressive,
more than I thought. And so, the bottom
line here is that the hardware end isn't
really close yet. You could get some
volatility after earnings just like we
saw with Broadcom. But frankly, it's
probably going to be a buy the dip
between now and next year when more uh
chip supply comes online as long as
hyperscalers don't U-turn on their capex
yet, which there's really no sign of
yet. But I think 2027 is probably that
year where we start seeing some of the
rollover. So in other words, still have
time to go. The company's got a great
valuation right now based on those Wall
Street projections which could change.
Balance sheet is really strong. This
company is a gold mine. It is a really
durable company as well. Like I don't
think there's a chance that they could
go bankrupt. Uh I know famous last
words, but their balance sheet is so
freaking strong and they're paying off
debt knowing the crash is coming and
they're just trying to milk as much
money as they can between now and then
and build the mo most robust
infrastructure and grab the most market
share they can. Honestly, they're smart.
I really respect the executives at
Micron. They are doing exactly what they
should be doing. uh they are uh very
disciplined, very strong company. I have
very little bad to say about this
company. Uh and uh I'm actually very
excited about it. So uh Wednesday will
be a very big day. Uh it is uh the day
I'm coming back. So uh we'll we'll cover
the earnings afterwards. But anyway, if
you like this, consider subscribing and
uh we'll see you in the next video.
Goodbye and goodbye.