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Shares of memory manufacturers have fallen sharply. Micron has lost 22% from its highs. SK Hynix fell in price on the second day of trading. Samsung is falling. SanDisk is falling. The entire memory sector has just entered the " bear" zone. And I see a lot of panic right now. So, let's break down what happened , why it happened, and where I stand on all of this, because the story the price is telling and the story the data is telling are completely different right now .
Last week, I released a video comparing SK Hynix and Micron after the largest foreign IPO in US history. The reaction from you all has been amazing. Questions, comments, debates—that's exactly what I want to see on this channel, and the main thing everyone asked was simple. Is the sell-off in Micron stock a cause for concern or a reason to pay attention?
So that's what today's video is about. We will do what we always do. Look at the data as it is. Not just on headlines, not just on red candles, but on real numbers. Micron closed Friday at $979. Three weeks ago it was $1,255. That's a drop of $276 in 18 days. On a stock that is still up over 700% over the past year.
So the first thing I want to look at is what actually caused this. These were not income statements. This quarter was the best in Micron's history. 41.5 billion in revenue, 85% gross profit, forecast of 50 billion for the next quarter— they exceeded all market expectations. The shares jumped after the report, and then immediately began to fall in price.
Three things happened at the same time . First, profit fixation. When a stock rises 700% in a year and then delivers an outstanding quarter, institutional investors lock in profits. This is normal. This is great . This is what you want to see. That's how markets work. Secondly, SK Hynix went public on NASDAQ on July 10 and raised 26.5 billion.
I covered this in detail in a previous video. Fund managers who were fully invested in semiconductors had to sell something to make room after such a 700 percent increase. Micron was an obvious candidate for cuts. This is capital rotation. This is not a fundamental business decision. And third, broader risks related to tensions in Iran and the rotation in the semiconductor sector—the entire chip market has pulled back significantly.
None of this is fundamental. None of these reasons have anything to do with Micron's business, their demand, margins, or future projections. Now pay attention to what I really want you to focus on this week, because while the stocks were selling off, something happened that barely made the news. TD Cohen, one of the leading semiconductor research analysts on Wall Street, published a note with a title you almost never see in memory market reports.
This time, things are really different. Analyst Kish Sanka ranks 11th among thousands of analysts on Wall Street. He doesn't throw these words to the wind. His argument is simple. In every previous memory cycle, prices eventually collapsed because there were no long-term commitments. Customers bought chips when they needed them and stopped when they didn't.
This created a cycle of ups and downs. This time, Micron has 16 strategic customer agreements. "Take or pay" terms , no cancellation, multi-year contracts, hyperscalers, corporate sector , auto industry, over a hundred billion dollars of guaranteed income by 2030, $22 billion in deposits already received.
This flaw did not exist in any previous cycle. This is structural change. Its target price is $1,600. The shares are currently worth $940. And the contracts keep coming. Last week, Micron signed a new long-term agreement with Ford. Ford CEO says high- volume car production in the US requires a sustainable supply chain.
Micron will supply memory chips for next-generation Ford vehicles from a plant in Virginia. This is important because it shows that the demand for memory is no longer just about AI. The automotive industry is securing supply. Every industry that was burned by the chip shortage in 2021-2022 is now signing long-term deals to prevent it from happening again .
This is what fills Micron's order book. Regarding the offering, three announcements were made on July 9th, which were lost in the noise surrounding the SK Hynix IPO. Micron has increased its investment commitments in the US to more than $250 billion by 2035. They have reached the construction stage at a plant in New York, the largest semiconductor manufacturing site in US history.
Vertical construction has already begun. They have allocated $3 billion to strengthen the domestic supply chain, including $ 500 million to build a silicon wafer manufacturing facility in Texas. Companies do not make such commitments if they believe demand will soon fall. And now here's the part that the broader market has n't gotten to yet.
Last month, Morgan Stanley published a 66- page report coining a new term: “chipflation.” Their thesis is that the 50-year trend of falling memory prices has finally been broken. Memory prices have increased more than sixfold in the last year. The overall memory market is expected to grow from $ 220 billion in 2025 to $890 billion in 2026 .
That's $670 billion in additional revenue in one year. This figure is larger than the entire smartphone market, the entire PC market, or the entire server market separately. And the reason why supply is not keeping up with demand is structural. It takes 18 to 24 months to build new storage facilities.
AI buyers need them now. HBM uses 3-4 times more wafers per useful bit than conventional DRAM. So every chip dedicated to AI is a chip that won't end up in PCs, phones, or cars. Apple has already raised prices on some products due to the cost of memory. Lenovo has also raised prices. Microsoft said that $25 billion of its $190 billion capital expenditure this year is due to rising chip prices alone .
This is not just a short-term surge . These are new pricing realities. So what is my position in all of this ? Well, I'm watching the stock of a company that just reported 85% gross margin, is forecasting $50 billion in revenue next quarter, has $100 billion in signed contracts, and is trading at a forward P/E ratio of around 7-10.
The average forward P /E for the Big Seven is around 27. Micron is growing revenue faster than any of them. As I said in the video about SK Hynix, the CEO of SK Hynix himself said that 2027 will be the worst year for supply shortages in the history of the memory industry. Jensen Huang seems to be saying, "Please produce more wafers for HBM." Morgan Stanley claims that the era of falling memory prices is over, with shares down 22% from their highs.
I'm not panicking. The data does not give reason for panic. They just require patience. The next important moment is September 22. That's when Micron reports its fourth quarter results. They forecast $50 billion in revenue, 86% gross margin, and $30–$32 EPS. If these indicators are confirmed, the gap between price and fundamentals will be hard to ignore.
Here is the news. This is the current state of the market. The community reaction to the SK Hynix video was incredible. The questions you ask are exactly what is needed. And that's exactly what we continue to do on this channel. So, cut out the noise and look at the data for what it is, not what the headlines make it out to be.
And if you want to stay up to date with the memory trade and see the real- time analysis, be sure to like, subscribe to the channel, and share your thoughts in the comments. I read every comment and will be back tomorrow with a review of the most important. This is not financial advice. Be sure to do your own research. Good luck to everyone.
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