The Key Takeaways From Micron's Better-Than-Expected Forecast

Author: Bloomberg Television · Watch on YouTube

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Original language: English

Original video: The Key Takeaways From Micron’s Better-Than-Expected Forecast · Channel: Bloomberg Television · 04:22 · Watch on YouTube

Topics: AI infrastructure and hardware, Markets and economy

Summary

Handy Santo calls Micron’s results another strong beat and raise, while noting that investors remain divided over the memory market’s cyclicality. He argues that multi-year supply agreements, strong pricing, and a shortage outlook into 2027 could make this cycle more durable than past booms. He points to AI workloads, server refreshes, and rising memory content in other products as sources of continued demand. For the company’s outlook, he wants greater visibility into growth and profitability, and says other customers could fill demand if some hyperscalers scale back.

Key points

Santo describes Micron’s results as another strong beat and raise.
He says bears are demanding perfection while bulls are considering multiple upside scenarios.
Investors are placing a high burden on Micron to double revenue and earnings in the next fiscal year.
Hyperscalers are securing multi-year memory supply, with pricing windows, which Santo sees as supporting cycle durability.
Santo says pricing remains strong and Micron’s supply agreements can last three to five years.
He considers the memory supply shortage outlook for 2027 solid.
AI training, inference, and agentic AI are among the growth drivers he identifies, alongside traditional server demand and server refreshes.
Rising electronic content in consumer electronics and physical AI could also sustain memory demand.
Santo wants to hear more about the durability of growth, early visibility, and gross margins.
He says tier-two and tier-three customers, including neoclouds, enterprise AI, and sovereign AI, could pick up demand if some hyperscalers scale down.

Chapters

Start	Chapter	Summary
00:00	Micron’s results and investor expectations	Santo calls the report a strong beat and raise and describes the divide between bearish and bullish expectations.
01:01	Why the memory cycle may last	He points to multi-year supply agreements, strong pricing, and a solid shortage outlook for 2027 as signs of durability.
02:09	Potential sources of memory demand	Santo discusses AI applications, traditional servers, refresh cycles, and rising memory content as demand drivers.
03:52	What Santo wants from the company outlook	He highlights visibility into growth and profitability and says other customer groups could take up supply if hyperscalers scale down.

Quotes

I think this is another strong beat and raise for Micron. — 00:00

At this point, I have not heard any negative data points pointing that the memory cycle is going to reverse — 01:37

the supply shortage outlook for 2027 remains solid. — 02:09

the key focus is the durability and then early visibility into growth and profitability — 03:52

there are many like tier two, tier three across like high neo clouds, enterprise AI, and then sovereign AI that would be happy to pick up the slack. — 04:22

Concepts and entities

Micron, Handy Santo, Romaine, OpenAI, Anthropic, memory cycle, DRAM, flash memory, hyperscalers, agentic AI, Sovereign AI

Full transcript (original language)

00:00 Handy Santo is research analyst and portfolio manager over at Gabelli and he actually holds Micron in one of his main ETS. Uh Handy, give me your reaction here, your knee-jerk reaction to the earnings that we just got out of Micron. What do you make of it? >> Thank you for having me, Romaine. I think this is another strong beat and raise for Micron. Um the debate about Micron will continue like it’s cyclicality and I do think that Micron present a big divergence between the bears and bulls. The bears are demanding

00:30 perfections while the bulls are contemplating like multiple upside scenarios. >> Give me a sense when we talk about the upside scenarios and I know we have to wait for the conference call to get a more longer-term outlook out of this company. But is this a situation that we’re not going to get 300-plus percent revenue growth forever? We’re not going to get 1,000-plus EPS growth forever? Can this company glide down to a safe and I guess normalized growth rate that’s going to please investors and not

01:01 spook them? >> Yes. So Romaine, investors are putting a high burden on Micron to double its revenue and double its earning in the next fiscal year. And when it comes to the questions whether this time is different or this time is similar to the to the boom and bust of memory cycle, I would argue that there are different elements this time. We are seeing hyper-scalers securing like multi-year supply of memories ahead with some pricing window and I think that is something that

01:37 that can provide like sustainability and durability of this memory cycle. At this point, I have not heard any negative data points pointing that the memory cycle is going to reverse uh toward a decline anytime soon for the foreseeable future. And then pricing also remains strong. And then Micron attempts to provide durability by signing multi-year supply agreement that can be as long as 3 to 5 years. And then that amount of

02:09 multi-year supply agreement will grow. So I do think that the supply shortage outlook for 2027 remains solid. >> Well, give me a sense here, too, that when we start to talk about the the big fear here, which is always that, okay, if we do start to see a scale back in some of the spending not by the hyperscalers, but by OpenAI and Anthropic, are there sort of second and third-tier players out there that could actually step in to keep the infrastructure demand going? Because one of the arguments has been made that while this buildout is about AI, that

02:43 there are other uses for all of this infrastructure beyond just AI. >> Yes. So I do think Micron present like strong growth stories. When we look at the AI, they are like AI training, AI AI inference, and then agentic AI. We are hearing like agentic AI applications popping up like week in and week out now. And then it fills up the news. And then second, we also have like traditional server market that is seeing agentic AI driving more workload and then therefore

03:18 driving higher demand. And then we also have like server multi-year servers refresh cycle that will continue for the next two two or three years. >> Yeah. >> And on top of that, I do think that um memory, like the increase of electronic contents across like consumer electronics, physical AI, will continue to be sustaining growth drivers for the memory demand. >> Um when we start to talk about sort of what comes next and I mean, what do you

03:52 want to hear from the CEO and the CFO on this call tonight that would I guess I guess double down in your convictions about the company, about the stock? >> Yes. I think the key focus is the durability and then early visibility into growth and profitability, what gross margin looks like. I know that the bears might not be pleased if gross margin deep toward like low 80%, but low 80% compared to the historical peak is a

04:22 very commanding position for Micron. I would like also to note that Micron operates in an oligopoly market with limited number of players. And they are the leaders in both DRAM and then flash memory. And then I think referring back to what if a certain hyperscalers let’s say like scale down. I do think there are many like tier two, tier three across like high neo clouds, enterprise AI, and then sovereign AI that would be happy to pick up the slack. And then I like buy the extra memory supplies.