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Well, they didn't go up when the AI was going up . But in a way, cryptocurrencies are a post-AI story because, as AI capabilities increase—and we 've heard this from many of those AI researchers—the need for blockchain will increase because it's the only way to test and validate transactions and protect ourselves from AI.
Last week, I believe there were some high-profile AI security exploits , one of which occurred in the Orchid suite for Zcash. And that caused some panic. I don't know why it should have triggered a massive sell-off of all cryptocurrencies. But it's important to keep in mind that AI exploits are occurring at a rapid and ever-increasing rate across all financial services.
The problem is that publicly traded banks do not disclose exploits. Therefore, I believe these attack surfaces are increasing everywhere and we need to be aware of that. And the third is that Wall Street continues to tokenize. It's a real innovation, a great innovation to convert money into software, tokenize stocks and real estate.
These are composability problems that only occur on blockchain. For me, I think the crypto narrative is still in good shape, but you're right. The excitement and fear of missing out have been present in AI. You know, Tom, going back to the stock market, seeing that some of the Mag 7 stocks went down, the Dow only went down a little.
The Nasdaq 100 still rose 2%, but all the averages have returned. We're likely to end the day higher, but if we do n't, if the S&P ends the day lower after the surge we had during the first few hours today, would it change the way you see this market in any way? And if not, what would change? Well, Brian, there's going to be a lot of tension in the markets until June 12th.
Because I would say that there is a very large group of our institutional investor clients who would say that there is room for an increase, that there is a 75% chance that the first increase will occur at the end of the year. I believe the data from both sides of the Federal Reserve's dual mandate support it .
So I'm not sure you're going to see Kevin Warsh opposing that at this particular time. I think what will be most interesting in the short term is Warsh's approach to the frequency of press conferences, his views on publishing the dot plot, and the summary of economic projections. Do you want fewer Federal Reserve speakers at the Federal Open Mouth Committee?
Therefore, I think that's going to be the short-term focus, especially in the first meeting, on how to establish the framework for thinking about this. Meanwhile, each data point, on both the inflation side of the mandate and the labor market side of the mandate, will adjust those market-based expectations .
But given what we know now, I think the next step is more likely to be an increase rather than a cut to the podcast. And Steve, thank you for being here this morning. Thank you. Why don't we talk about SpaceX's IPO first? We expect it to arrive by the end of this week, for sure, maybe even Friday. I don't like.
Because? Explain it to me. Let's see. If you read the prospectus, there are some fun things in the prospectus, like...my favorite part of the prospectus is that one of the things SpaceX wants to do is asteroid mining. I thought it was funny. Asteroid mining is a central theme in an Apple science fiction show called For All Mankind .
But I think the probability of asteroid mining happening soon is quite low. But I think the most important thing in the outlook is how capital-intensive SpaceX has become. If we go back to fiscal year 2023 and compare revenues with capital expenditures, the latter represented only 42% of revenues. And in the most recent first quarter, it was 215% of revenue.
And that's because in fiscal year 2023, SpaceX was not in AI. Yes. I was only on Starlink and in space . Very difficult. It's AI. It is AI that requires incredibly intensive capital. And Grok, with all due respect to Elon Musk, is not a top-tier AI company . And I don't think anyone talks about Grok as a cutting-edge company.
No, but the computing power they are building is even comparable to that of companies like Anthropic. No, I understand, I understand, but what you 're talking about is an incredibly capital-intensive business. It's not like a software company. It's not like a software company. It's because it's capital.
I mean, I think the biggest news of last week was the fact that Google is raising $80 billion. Correct. And although it has a lot of cash flow. But when it spent $100 billion last year, it was able to manage it with its own cash flow . When he reached spending $180 billion, he had to raise that capital.
And not just capital, shares. And you know, there were rumors that Meta was going to raise capital, Microsoft was going to raise capital. The entire technology sector is transforming because it has gone from being a business with few assets to a business with many assets. And the other thing I'd like to point out is that, despite the incredible sums of money being spent, what's being produced in terms of LLM and agentic AI, which is great, isn't really differentiable.
There isn't that much difference between ChatGPT. It's highly commercialized. People constantly change from one to another. There are no competitive advantages. Therefore, despite all the money being spent, what is being created seems to me at this point to be a commodity. Micron just sold the blank sheet, and this changes everything for Nvidia investors.
Today has been a very important day for the AI industry. Micron has just reported one of the strongest earnings reports we've seen from any semiconductor company . And frankly, even investors who were expecting a great report probably weren't expecting such strong figures. Let's analyze exactly what has happened and, more importantly, why it matters to Nvidia and the entire history of AI infrastructure.
First, it far exceeded the profits. Micron reported revenues of $ 41.46 billion, exceeding the $35.9 billion expected by the Wall Street market. Adjusted earnings per share reached $25.11, beating the consensus estimate of $20.80. But what really surprised investors was the forecast. For the next quarter, Micron forecasts $15 billion in revenue, compared to analysts' estimates of about $43.4 billion .
That's a big step forward. Even more impressive was the profitability. Micron reported a gross margin of 84.9% this quarter and forecast a gross margin of approximately 86% next year. For comparison, Nvidia's recent gross margin is around 75%. This does not mean comparing Micron to Nvidia. They operate in different parts of the AI ecosystem, but it is an example of how powerful the memory market has become today.
Why are the margins so high? The answer is simple. There is not enough memory. For years, memory was arose, companies expanded their production, and supply eventually exceeded demand. Prices plummeted and the cycle repeated itself. But AI has fundamentally changed that equation. Today, demand does not come primarily from smartphones or PCs.
It comes from hyperscalers, cloud providers, AI labs, enterprise customers who are on AI projects, and each of them needs a huge amount of high- bandwidth memory. The result is that demand continues to exceed supply. Customers are willing to pay high prices because, quite simply, they have no other choice.
The most important announcement of the conference, although the earnings report grabbed the headlines, I believe came during Micron's conference call. Management revealed that the company has signed 16 long-term strategic agreements with clients. These contracts usually last for 5 years and extend until the end of this decade.
And what's most remarkable, those agreements already represent approximately $100 billion in committed minimum order backlogs. And many executives have repeatedly pointed out that this figure is conservative, as it only reflects the minimum purchase commitments. Think about what this means. For decades, investors feared for Micron, as demand could vanish overnight.
Now, customers are committing to buy memory years in advance. This is a completely different business model. It also offers investors much greater visibility into future income.
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