Micron reported a blowout quarter and raised guidance far beyond expectations, with management arguing AI-driven memory demand and supply constraints are structurally changing the business. The hosts focused on what this means for Micron, other memory names, and the broader AI stack, and both were notably bullish after the print.
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This transcript centers on Micron’s fiscal Q3 2026 earnings call and the immediate after-hours reaction, with the hosts treating it as a major read-through for the entire AI hardware stack. Before the call, they framed Micron as a market that had already rerated sharply and discussed whether the stock’s prior surge had outpaced fundamentals. Once results hit, the tone shifted dramatically: Micron’s revenue, margins, EPS, and guidance all came in well above expectations, and the hosts repeatedly emphasized that the company appeared to have “saved the AI market” for the night. The core thesis from management was that AI has structurally transformed memory demand while supply remains constrained for years. …
Immediately, the setup is bullish for MU and the memory complex, but the move is likely to stay volatile because the market has to decide whether the after-hours jump already discounts the print. The actionable focus is on how the stock, sell-side estimates, and peer semis react over the next few sessions.
Over the next few months, the base case is continued strength if pricing, SCAs, and tight supply hold through the next guide cycle. The view would weaken if new supply ramps faster than expected or if management starts signaling that pricing power is normalizing faster than anticipated.
Structurally, the call suggests Micron may be moving from a classic memory-cycle business toward a more contract-backed AI infrastructure supplier. If that holds, the long-run implication is a higher earnings floor and a more durable valuation than the market has historically assigned to memory names.
Micron's fiscal Q3 guidance of ~$33.5B revenue, 81% gross margins, and ~$19 EPS reflects two S-curves — revenue growth and margin expansion — happening simultaneously, leading to ~1000% year-over-year EPS growth.
Speaker visualizes Micron's guidance showing simultaneous revenue growth and gross margin expansion, pushing gross profit and EPS to extreme year-over-year growth rates.
Micron's strategic customer agreements (SCAs) with price bands will generate gross margins well above Micron's peak quarterly margins in any past cycle.
SCAs are take-or-pay with floor prices that lock in very high margins; 14 of 16 SCAs have cumulative minimum revenue of ~$100B.
Micron expects fiscal Q4 revenue to be a record $50 billion plus or minus $1 billion.
What is driving the selloff in chip stocks right now?
Jose says he is still bullish on AI and neo-cloud names, and he has been buying some of the pullback. He frames the decline as a mix of stretched valuations and short-term volatility, while still seeing long-term opportunity in memory and AI infrastructure.
What does Micron's outlook suggest about memory demand in 2026 and 2027?
Jose says Micron can give a broader read on the AI industry because it is already sold out for 2026 and can speak to demand beyond that, including 2027. He links this to the idea that the Anthropic deal may have implications for future years, not just this one.
How should investors think about the Broadcom/OpenAI custom chip deal?
Jose says the timeline is extremely fast and notes that annual design cadences are already happening at the top tier. He suggests Broadcom has been doing this for a while and that the deal reinforces the broader shift toward custom AI silicon.
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