Micron Just Locked In $100 Billion in Sales, and Wall Street Thinks the Boom-Bust Chip Cycle Is Dead

Micron Technology (NASDAQ:MU) had signed 16 semipermanent lawsuit agreements, 14 of them locking successful astir $100 cardinal successful minimum guaranteed gross done 2030, and the banal was up 16% because, successful her words, "Memory has ever been conscionable been roar and past bust. But Micron is fundamentally telling everyone that's wholly over."

That assertion matters successful an manufacture defined by cycles. DRAM glut, DRAM shortage, repeat. So what did Micron really do, and wherefore are radical who lived done the 2019 and 2023 downcycles consenting to underwrite a antithetic ending this time?

What the contracts really changed

Micron's fiscal Q3 gross came successful astatine $41.456 billion, a 17.60% bushed connected statement and 345.72% year-over-year maturation from the $9.3 cardinal Micron printed successful the prior-year quarter. Non-GAAP EPS landed astatine $25.11 against a $20.2843 consensus, the seventh consecutive 4th of beating Wall Street.

The borderline enactment is wherever the rhythm thesis wobbles. GAAP gross borderline was 84.6%, against 37.7% a twelvemonth earlier. Software companies person 84% gross margins. Memory companies, historically, person tally a fraction of that. Micron is guiding Q4 to astir 86% connected $50 cardinal positive oregon minus $1.0 cardinal successful revenue. As Partsinevelos framed it, "they tin find the pricing close now, which is large for them to support those margins up."

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CEO Sanjay Mehrotra's framing successful the property merchandise was that "multi-year Strategic Customer Agreements volition importantly heighten the durability and predictability of Micron's beardown fiscal performance." The hyperscalers gathering AI infrastructure are consenting to pre-commit to HBM and DDR5 capableness done the decennary due to the fact that they cannot spend a repetition of the 2024 shortage. Micron's Cloud Memory conception unsocial did $13.769 billion, with Core Data Center different $11.524 billion.

Qualcomm's parallel stake

Qualcomm (NASDAQ:QCOM) CEO Cristiano Amon pitched the aforesaid absorption from the different side. Qualcomm raised its non-handset gross people to $40 cardinal by 2029, astir treble its anterior forecast, with astir $15 cardinal from information center. And Partsinevelos noted Qualcomm "named META arsenic its archetypal lawsuit for its caller information halfway CPU, and said it signed 2 hyperscale deals for customized chips, 1 successful the United States, 1 Chinese."