To The Moon

My Take

The +10% moves in Micron and SNDK suggest capital is rotating back into the AI hardware trade, specifically memory and storage. The key driver mentioned—HBM4 capacity ramp—is important. High Bandwidth Memory is becoming a bottleneck component for AI accelerators, and companies with credible supply visibility are being re-rated.

Morgan Stanley lifting Micron’s target from $350 to $450 (while reiterating Overweight) indicates:

• Increased confidence in pricing power

• Improved earnings visibility

• Potential multi-year AI-driven demand cycle

What Matters Fundamentally

• HBM Supply/Demand Tightness

If HBM4 ramps successfully and remains supply-constrained, Micron could sustain premium pricing and margin expansion.

• AI Data Center Capex Durability

The thesis depends on hyperscalers continuing aggressive AI infrastructure buildouts. Any slowdown in cloud/AI capex would challenge the narrative.

• Memory Cyclicality

Memory is historically volatile. While AI demand is structural, the industry is still cyclical. The key question is whether AI structurally dampens that cyclicality.

• Valuation vs. Expectations

A 10% move + higher target means expectations are rising quickly. Future upside depends less on narrative and more on execution and earnings beats.

Investor Framing

• Bull Case: AI memory demand becomes a multi-year structural driver, margins expand, and Micron transitions from cyclical commodity memory to strategic AI supplier with higher multiple.

• Base Case: Strong 1–2 year AI tailwind, but memory cyclicality eventually returns.

• Risk Case: AI spending normalizes faster than expected, leading to oversupply and compression.

My Comment

This looks less like a short-term bounce and more like renewed conviction in the AI memory cycle. The HBM4 ramp is the real story—if Micron executes, earnings leverage could justify higher multiples. That said, with sentiment turning bullish quickly, risk/reward becomes more execution-dependent. I’d want confidence in sustained AI capex before chasing aggressively.