SPEAKER_00 0:00

Justin, it is micron day, micron earnings. You ready for this? I'm ready for this. We are gonna go macro on micron yet again. I think we did one episode like this in the past where we like solely focused on micron. Um, with that said, we'll take any listener questions we can get. They don't have to be micron related, but yeah, a lot of our topics are gonna be micron focused.

SPEAKER_01 0:25

Uh okay, so uh obviously we're gonna talk about their earnings, we're gonna try to digest them live as we see them, or you know, like uh we're gonna wait a minute for that for us to actually have access to the reports and everything so that we can go over it. So um, and we'll we'll look at sort of all the uh pertinent information and we'll see the stock price uh and all that good stuff. But uh before we get into it, uh is there anything else for us to talk about? I I noticed uh uh my portfolio is down all around. So is there anything you want you want to talk about in the portfolio before we get into micron's earnings?

SPEAKER_00 1:03

Well, you did sell some micron a day or two ago. That yeah. Uh is it is this the same as before where it's just continuing to take a bit of profit?

SPEAKER_01 1:16

Yeah, I did happen to catch the uh the uh top. I think I sold around $11.99 or something like that. Um uh another two and a half percent. So in total of uh my micron holdings, um, I've sold seven and a half percent. And the way I think about it is that uh because um I'm up more than two and a two times on you know micron, uh the price has more than three X. So I'm up two 220% or something like that. Uh the way I think about it is that I've taken off more than a fifth of what I've invested into Micron already. So uh my seven and a half percent uh you know trim on Micron actually represents you know more than 20% of what I put into Micron. So it's it's yeah, it's kind of cool. Um so you know, pretty soon, uh hopefully, assuming the price uh continues to go up, uh I hope to have taken out my initial investment at some point in the future, but it's largely going to depend on how uh their quarter is and what their commentary about it is and uh all that good stuff. So uh it is kind of nerve-wracking to go into a quarterly report with um with a third of my uh portfolio in a single company. So uh super fascinating.

SPEAKER_00 2:45

So fascinating to say the least. Um okay, we do have the report. Oh, we do. Excellent. Let's let's jump into it then. Okay. So it is a double beat revenue. They were expecting 35 billion. It ended up coming in at 41 billion, so that's an 18% beat. EPS, they were expecting $20 EPS, and it came in at over 25. So that's a 24% uh beat. And I don't know if we that is unbelievable numbers or a little over 2% after hours.

SPEAKER_01 3:23

Which seems low, but uh but I mean holy macro. Do we want to click on that report button and see if uh we don't have the same numbers, but we do have this. Okay. Um can you zoom in so that we can let's let's let's take a look. Go for it. Like you you go ahead and read it. So I suspect it'll be a little bit easier. Actually, let me just get can I do this?

SPEAKER_00 3:52

There we go. Yeah, okay. Uh so revenue we hit on gap net income of 28 billion or 24.67 per diluted share, non-gap net income. Also roughly 28 billion, yeah, or uh a little over $25 per diluted share. Uh operating cash flow of $25 billion versus $11 billion the prior quarter. That's crazy.

SPEAKER_01 4:26

So you know, one of the things, one of the criticisms of this company was that they're spending so much on CapEx, building more uh manufacturing facilities. So they're not gonna be uh they don't have a lot of free cash flows. $25 billion of free cash flows basically means Micron has more free cash flows in in a single quarter than any other company that we talk about. That's more than Google, that's more than Meta, that's more than Amazon, that's more than um more than ever, maybe not NVIDIA, but everybody other than Nvidia. That that's pretty crazy. $25 billion in a single quarter. Yeah, and it's just free cash compared to last year.

SPEAKER_00 5:03

Last year was just four and a half billion. Wow. Yeah, that's incredible. Okay.

SPEAKER_01 5:11

So those are the those are the highlights. Um do they provide guidance in this report as well for next quarter? Good question. Cloud memory business units, um, we have core data center business unit, mobile and client business unit. Um so fiscal 26 versus versus 25, those would be the ones to compare to. Um roughly quadrupled their cloud memory business. The core data center business is up almost uh what it's like roughly eight times. The mobile uh and client business unit is up roughly four times, uh, you know, three and a half times maybe. Uh automotive and embedded business unit is also up roughly uh four times. Unbelievable. Um, do we have another page on this thing? On this report? We do. All right. Let's let's see what else we have. Business outlook. Okay, outlook. Oh my god. Uh so next quarter's revenue 50 billion plus or minus one uh billion expected. So 50 billion of uh of gap in a single quarter. That puts them on a run rate of roughly 200 billion dollar run rate, uh revenue run rate. Um gross margins approximately 86 percent, which just seems absolutely crazy. And then diluted earnings per share of over $30 per share, which again puts the run rate at about $120 per uh per share. So that's next quarter.

SPEAKER_02 6:59

Yeah.

SPEAKER_01 7:00

And and the they're probably setting that up to be able to beat as well. These numbers could frankly not be any better, right?

SPEAKER_00 7:10

Like this is absolutely unbelievable. And analysts are we're expecting, oh, you can't see that right now. Hold on. 41 billion. Yeah, 41 billion, and they're saying, no, no, no, we're gonna guide Hyder at 50 billion. Wow.

SPEAKER_01 7:24

Wow, look at that beat, by the way, compared to what analysts' expectations were for this last year. Yeah, okay. Move it, yeah. That is I have never I've never seen anything like this before. Even even Nvidia was not beating like this um in its sort of like peak performance just a couple years ago, as it was just destroying their numbers. Uh, this level of growth is absolutely insane. And there you go, up 7% now, over 7% after hours. But even 7% just seems ridiculous. Like, so if if Micron was up, just for sake of argument, 50% at $1,500, it would have a forward PE based on just taking that $30 um uh expected EPS for next quarter and multiplying that by four, that's $120 of EPS. Uh you know, if you multiply that by a PE of 10, a forward PE of 10, that would give you $1,200. But if you multiply that by a forward P of like $15, it'd give you $1,800 a share. So Micron just continues to be extremely undervalued here, um, unless something changes. I mean, this is this is pretty incredible. It's it's unbelievable. Um, and the fact that it's generating all this profit with its cash flow as well. So it's basically debt-free. It's now got all this excess cash. Uh, what's it gonna do with all this cash? Um, well, there's lots of things that this enables. Cash enables more RD that uh they could create new types of memory that might be ideal for AI. Like cash gives you access to talent, it gives you access to facilities, it gives you access to investments that you can make for the future. Uh, so all these profits could help set them up for additional unfair advantages. Cash gives you access to be able to invest in the same companies that are using your products, like their Anthropic deal, for example, that they just made, uh, where they're making an investment in one of the fastest growing companies in history. That company is committing to buying some of their products because they need it. They need more memory to provide better uh LLM and uh models that have uh more context available for the LLM solutions that their Anthropic is providing. So it's a self-fulfilling um, I mean, it just the company just keeps getting stronger. And when this cycle breaks, it's kind of hard to predict because AI is not yet saturated. We're just in the phases of where AI is just continuing to grow and dominate in every field. Um, so yeah, I'm I'm I'm happy I didn't trim more, to be honest. Like as I just look at these numbers, I'm like, okay, uh it's it's good that I took some chips off the table, but I'm glad more than 90% of my chips are still on the table.

SPEAKER_00 10:30

And to be clear, you're saying that while the price after hours is still lower than where you took profit.

SPEAKER_01 10:38

Absolutely. Absolutely. Yeah. If it if it was $1,200, if it opens $1,200 tomorrow, I'm not trimming at $1,200. So now I'm raising my bar in terms of where I'm trimming next. And I I don't, I haven't thought about it enough to know where that would be. I want to also listen to their call, which will be uh very important to see like how they discuss their uh one of the things that was super interesting in the last call, for example, is um their CEO talking about how their customers are starting to make five-year deals uh with them, five-year contracts. Uh, and uh they didn't provide a lot of clarity on like are the prices fixed or you you know what's going on in terms of the details of those contracts? Can the customer back out of those contracts? So I'm kind of curious to see if they have better answers to some of those detailed questions. Um so that'll be uh a factor. There is sort of like some of the criticism that uh uh is being thrown out at Micron and just memory chip makers in general, is that, well, if they are uh price gouging essentially their customers, is isn't that going to come back to haunt them as you know supply increases over the coming years? You know, so it'll be interesting to see if those type of questions come up in the QA section for uh for the earnings call. Um but uh but fundamentally, the the what we have been hearing from all of the hyperscalers, whether it's Nvidia or Google or Amazon or Meta or uh even Elon uh is that memory is absolutely critical, and we're gonna need way, way more of it, and we'll take all that we can get. And it and in fact, you know, most of these guys have been increasing their CapEx spending because of the increasing cost of memory specifically. So uh memory is a major bottleneck. Micron happens to be in a key position on this uh on the creator as one of the creators, one of three creators of this key bottleneck. Um, and uh that is driving prices up as well. So uh and they're bringing on more capacity uh next year. They're trying to inch out every piece of capacity they can from their existing um uh existing manufacturing facilities. So uh it's a freaking great position to be. I mean, why would I not want to own this company? Right?

SPEAKER_00 13:00

Like can you think of any reasons? No, I I agree. They're now up uh 10% after hours, yeah.

SPEAKER_01 13:08

Uh which doesn't surprise me at all.

SPEAKER_00 13:11

Do you want to talk about a little bit more about this anthropic deal? Um, I know you touched on it briefly, but I I think some of it is good, some of it I I think is maybe overhyped actually. Um but well I'll so I'll break down the key the key parts of it. So they are doing this partnership, Anthropic and Micron, where they're are going to co-design uh specific hardware for Anthropic's use. That I think is interesting.

SPEAKER_01 13:43

Um these are the things that money enables, by the way. When you're this profitable, you can be like, you know what, we'll invest three billion dollars in getting the top talent and you know, building these next generation chips that is going to be proprietary technology that maybe only Micron has going forward, right? Like so, but but of course, SK Heinex and uh Samsung might also try to do those types of things. Uh, one advantage that Micron has is that it's an American company, right? So these and these companies that they're making deals with are also American companies, whether it's Nvidia or Anthropic or OpenAI. So if if especially if we consider AI a national security threat, you want to have as much of that technology be American-based as possible. So uh that in itself also lends you know to future possibilities that uh that makes Micron or puts Micron in a pretty great competitive position relative to its competitors. Um but the fact that there's also only three competitors makes it makes this a pretty great industry to be in, right? Like even for Nvidia's chips, there's more than three competitors. So um and only one being an American company. And only well, uh yes, exactly. Whereas uh with Nvidia's AMD is also an American company, Broadcom and Apgore or whatever. Um so uh and you know, Google's making their own chips, Amazon making their own chips, Tesla making their own chips, but but um all of them are focused on the sort of like uh uh AI chip side of things, not the memory side of things. So, you know, everybody looking at that as a commodity that's cyclical or whatever may have actually worked to the to Micron's advantage. Uh and going forward, they might even have a competitive advantage if they make proprietary chips. Um but you were gonna you were gonna say something about anthropic that I think I cut you off on.

SPEAKER_00 15:39

Oh I'm just working through the highlight. So the other bet the other, I think, positive, big positive highlight is that uh Micron, it's unit's an undisclosed amount, but they were able to have a stake in anthropic series H. So I I like having that exposure um at as a shareholder of Micron.

SPEAKER_01 16:04

Yeah, for sure. But they didn't say what that um investment was. I suspect it was single-digit billions, uh, you know, if that, but um uh because they said it was a very small investment, or a small part of the $60 billion investment that Anthropic took at a $900 billion valuation for Anthropic, which is a great valuation for Anthropic, relative to their growth rate. You know, you know, Anthropic is on this sort of like rapid growth pace where they they very likely will IPO at a $2 trillion market cap. Uh, so that investment itself will probably be worth pretty substantially or double at least when uh Anthropic IPOs. But considering the investment is probably in single-digit billions, it's not gonna make a material difference on uh on Micron's market cap.

SPEAKER_00 16:56

Do you think there's a chance that uh amount is disclosed during this earnings call, or is it gonna be capital?

SPEAKER_01 17:03

You never know. You never know with these things. It's I'm I'm surprised it wasn't disclosed already as part of the announcement. Like that, you know, uh Micron made a $3 billion or whatever investment in them. Um, but uh but it's possible it might come up during the earnings call and they might uh they might decide to share that information. Um again, going back to the cash flow, like the $28 billion of cash flow being added to their sort of cash pile now that is rapidly growing. They're they're essentially debt-free. Uh they paid off something like four or five billion dollars of their uh previous debt this past quarter. And I think their total debt was around eight to ten billion. Again, I'm I I remember only rough numbers, so don't quote me on any of these things. But I think their total debt now is single-digit billions, low single digit billions. And now they have just added a huge amount of cash, $28 billion to their cash pile. So their cash pile from here on out is just gonna continue to grow rapidly. If they're gonna add another $30 per share, that is just over $33 billion additional cash that they're gonna add this coming quarter that we're we're already uh in for Micron. Um so you know it's conceivable they're gonna end the year going into 2027 with $100 billion of cash. And the question is, what do you do with all this cash, especially if you're generating an additional $30, $40, $50 billion of cash every quarter? And the the only answers are you pay it pay it back in dividends, which if they start doing that, the dividends could be pretty uh uh incredible. They can buy back their shares, which is typically what uh most companies have done, and uh a significant part of Apple's growth, for example, has been through the share buybacks, especially if it's trading at a low PE, uh low future PE, um that that would be a great investment for them. Uh and of course, they can make investments in other companies that are related to what they do, which would be the anthropics and next generation of the anthropics of the world, these next generation of companies that are coming up that are AI related. Uh, one of the things that Jensen said, for example, with Nvidia is that we made a mistake not making massive investments in OpenAI and Anthropic and others as they were getting started. And as a result of that mistake, they didn't uh, you know, they they wanted to be chip agnostic. So uh, you know, Micron could decide, okay, we're not gonna make this mistake, we're gonna invest in every AI startup that that is out there. Uh and it could just help fund the sort of like the next generation of uh these companies that are coming about. Um so it'll be interesting to see what they choose to do with their cash. But uh, you know, certainly if you have a smart, capable management team, which Micron seems to have, you're gonna start making some of those investments for sure.

SPEAKER_00 20:04

I I believe right now they're limited from doing buybacks due to the CHIPS Act.

SPEAKER_01 20:10

That I think expires in the first quarter of 2027. So um and that's that's secondhand information. I'm just presuming that other people who have sort of like set stated that as fact are correct. Um so I don't know that for sure, just to be clear. Uh but uh it's irrelevant, right? Right, like when your buybacks uh start is you know, you know, they'll just have a bigger cash file when they start buying doing the buybacks. And uh if that starts in Q1 of 2027 as opposed to today, that's okay. You know, it's not a big deal.

SPEAKER_00 20:43

But I do think there's an argument to be made that it's suppressing the stock price because it's unfortunate if they could do when and if they could do the buybacks. Like I know a lot of people online don't even realize that there's that expiration date. They just think they can't do buybacks. So there's also misinformation out there suppressing, I believe, suppressing the price.

SPEAKER_01 21:03

That's that's a very good point. That's a very good point. And when they do start the buybacks, there's going to be this massive amount of uh purchase uh pressure that that is going to happen where they're taking these shares off the table, right? They're no longer going to be part of the float and they they can't just cycle around. So share prices you know essentially have to go up as a result of a massive buyback. So um yeah. Yeah. I mean, there could be other well, there could be other reasons why share prices go down as well. If there's like lots of people who you you know like decide to sell their shares, obviously, you know, the share price is is a supply and demand uh uh function of supply and demand. But the fact that you you would have a significant amount of supply taken out by the company itself is a pretty important factor and has played a role for all of the major companies, whether it's Google or Apple or Meta or whatever, they have all had major. Major share buybacks that have helped their stock price go up.

SPEAKER_00 22:04

Um, okay. Going back to the anthropic deal, two more pieces I want to hit on. These I don't think are as exciting as a shareholder, but I want to get your POV. So, and you you did mention this, there is a supply agreement where they have uh Anthropic has guaranteed multi-year access to Microns uh chips, but this I'm not as excited about just because it's there's a memory shortage, they are always going to have a customer, at least for now. Um so this wasn't too interesting to me, but what what do you think?

SPEAKER_01 22:46

Well well, that that they would have access to the. I mean, I think that um what this is showing is that they're starting to make agreements like the the customers want probably um predictable price points. Like, you know, for example, Apple has announced now, and we we talked about Apple raising prices of their uh uh products, and Tim Cook has come out and said how they because of memory and cost of memory and storage going up, they're forced to increase their prices of um uh of their products going forward. So I don't know when that uh shift is gonna happen. Um there's already some shifts that have happened on Apple's products online, but I suspect what's happening is the customers want to have uh reliable pricing, and therefore they're much more willing to make multi-multi-year contracts that um that set their prices in in stone, right? Right rather than like getting uh affected by massive swings in in uh DRAM chip prices going up, for example. So um so if they can do that, this is really good for the anthropics and open AIs and you know, whoever needs the their access to their uh chips. And it's good for Micron and SK Heinex and Samsung, the memory makers and chip, the storage chipmakers, because it's defeating the argument that this is cyclical and it's going to crash, right? Because if you can say, by the way, our next three years worth of supply that we have planned for is now contractually sold at prices that, you know, like uh have these reasonable bumps that are happening. We can predict our revenue very accurately now for the next two or three years. Um that that you know, that would defeat the whole you know, uh it's gonna crash and burn argument that uh that every micron bear bear basically uh comes out with, and every memory bear essentially is that you know, memory is cyclical, this whole thing is gonna crash and burn. That's this sort of like bear thesis is that uh there's gonna be an oversupply. Uh the oversupply argument fades away if all of the supply is getting contractually eaten up by the people who need it or by the companies that need it. So um again, we're we're gonna get a little bit of uh insight into that from the call. But it should also be noted that uh even if you know Micron speaks very confidently that our supply for the next two or three years is going to be eaten up by these hyperscalers, uh, there is gonna be skepticism as to whether or not that will actually unfold in that way, right? Because it has never happened before in history. So there's always skepticism of these things that haven't happened before. And there's skepticism that the hyperscalers can continue to invest in the way that they have been, uh, because uh their free cash flows are actually declining, declining pretty rapidly. So the question is for how long can they keep it up? And then for how long can this uh memory demand continue? So those are legitimate questions. There is legitimate reason to be somewhat skeptical, uh, but the amount of skepticism for Micron has been greater than uh than I think it's um uh it's warranted, essentially, which is why I believe the stock price is very suppressed here.

SPEAKER_00 26:17

Yeah, I think it's a good point that it is helping um deteriorate the cyclical argument. Um, I think that's totally fair perspective. Uh the last piece I wanted to talk about is uh part of the agreement is that Micron will start using Claude internally. Now, if this means Micron hasn't been using any AI assistance for their programming uh or coding or whatever, uh then this would be a big deal because now they're going from zero to one. If they are using uh HANSEX systems already, and now they're just locked into using Claude, I view this as a problem because right now Claude is absolutely fantastic, number one uh player in regards to uh engineering, right? But that's not a guarantee tomorrow. So if if this is locking them in and they they can contractually can't use uh codex or Gemini in the future if that those models were to surpass Claude and performance, that would be a concern. But again, if they aren't using any of these systems right now and that they're gonna start using these systems, that's a huge win.

SPEAKER_01 27:42

Yeah, I I suspect that that's just a minor point in the agreement that you know, like they've probably been using them internally. They probably just signed an enterprise agreement to be a larger customer, consumer of Anthropic's products. And these deals are rarely exclusive, meaning like uh if they want to pay for Anthropic and go pay for OpenAI, also they probably have the option to do that. There's uh usually not any reason to sort of like sign up for an exclusivity with any one vendor. Um I I think it's just sort of solidifying the fact that they are partners, right? Like, and and hey, we're gonna use your products and we're gonna, you know, like both sides are saying we're gonna use your products. So um it's it's not a surprise at all.

SPEAKER_00 28:30

Okay, Micron is now up almost 14% after hours.

SPEAKER_01 28:34

Oh wow. Their slides are also out. Um, I'm I'm shifting through their slides to see if there's any there, and it does look like they're trying to address a lot of the concerns in the slides, which requires a lot of reading, which might be tough to do while uh we're live here. Um, but I'm like trying to look at the financial highlights to see if there's anything else that uh uh that is pretty incredible. Revenue increased 67% quarter over quarter, which is unbelievable. Um NAND chips, these are the storage chips, essentially, the flash memory uh chips. When you buy an iPhone, for example, with 256 gigabytes, that's the NAND chips that are in there. Uh that business has grown to $9.9 billion, representing 24% of total revenues in fiscal in this last quarter. Um, by the way, Micron's NAND business, the the flash chip, storage chips, is bigger than the entire company of uh Sandisk, for example. So Sandisk is primarily just NAND only. Um, so that's kind of an interesting little side bit of information. Um let's see what else is kind of interesting. So a lot of information in this slide deck that uh uh it's hard to digest by just skimming it over. I know I'm still blown away. Yeah, I'm blown away by the net income of $28 billion off of $41 billion of revenue. So though those are huge highlights. $25 per share of diluted earnings. Um cash from operations, $25 billion. It's just comical that this company came out of nowhere and is now generating more cash than Apple and Google and Microsoft. And um it's pretty pretty incredible. Oh, uh buybacks. Uh oh, okay, it says none. Uh so they they haven't started buybacks. Uh which which was expected, but I'm surprised they have a line in there. Yeah. Maybe they're hinting at something in the future. That's right. I think they they put a spot in their slide deck so that uh they can show what the buybacks are going to be uh later. Umicron continues to invest in a disciplined manner across our global footprints to address customer demand. Uh our capex is net of anticipated government incentives. So they're getting some government incentives as well as a result of uh, I think it was the CHIPS Act, right? Um in Q4, we project CapEx of around 10 billion, bringing full-year fiscal 2026 uh CapEx to approximately 27 billion, which is again peanuts now considering they're gonna have over $100 billion of the profits.

SPEAKER_00 31:42

Um this stands out for you? Oh, I was I was gonna point out a bullet. Um they said December 9th, 2026 is the anniversary of the CHIPS Act. Um, okay. That might be when they can start doing the buybacks.

SPEAKER_01 32:04

The buybacks that that might be. I'm sure they're gonna get asked about it on the quarterly call as well. So yeah, uh, if you are interested in listening to the quarterly call, uh you can listen to it on earningshub.com. So that'll be live. I think uh it goes live in what half an hour? It's probably at 5 p.m. Eastern. Uh although we can probably is it 6 p.m.

SPEAKER_00 32:25

Eastern? Wow. It's reading as oh wait, no, maybe not. Or is that happening right now? 4 30. 4 30 p.m. Sorry. There was a post it's happening. So it's happening right now. Yeah, so it started two minutes ago. There was a post call scheduled for 6 p.m. Eastern, which is what I was reading.

SPEAKER_01 32:45

Okay. Um don't leave this uh this stream to go listen to their call. No, I'm just kidding, you can if you want to, but uh, but you can always uh uh start it from the beginning no matter when you go to it. Um all right, what else do we have to talk about?

SPEAKER_00 32:58

Uh well just to circle back to Earnings Hub. For anyone new here, we are the creators of Earnings Hub, so you could check out that product. Um, it's a way to listen to any and all earnings calls, um, and arguably the best way to do it online. I'm not biased.

SPEAKER_01 33:17

We tried to make the best product, uh, and I think we have what is considered the best product by a mile for everything earnings related. Uh, the app is also uh rated highest app, financial app in the app store, uh, more than the 4.9 store. Yeah. Yeah. From thousands of reviewers. So it's not just us thinking that uh it's the best product. All right, should we get to listener questions or what are your thoughts?

SPEAKER_00 33:44

Okay. So I was actually going to talk about this, might be old news at this point, but I was gonna talk about yesterday's uh like 13% drop with Micron and that down a little bit.

SPEAKER_01 33:54

Okay, okay, so what happened is Micron hit uh record high on Monday of over $1,200. Then SK Heinex announced, uh which is a South Korean company, uh announced that they're shifting some of their focus from creating HBM memory, high bandwidth memory for AI, to creating DRAM memory, which has higher margins right now, and DRAM prices have gone through the roof. Um and uh the South Korean market took that as meaning, oh, demand for high bandwidth memory and AI uh memory has basically started to diminish. And that's the way they took it. So they punished SK Heinex's stock price severely. Uh, separate from that news, um, South Koreans uh uh uh uh leading party, uh well, leading political party has uh started talking about taxing unrealized gains. So the combination of those two things actually caused the South Korean stock market to come down pretty significantly. So Micron had a uh yeah, um Micron had this sort of like record high $1,200 price point that it hit on Monday. Then the South Korea thing happened after hours, and of course Micron opened Tuesday down more than 10% than it ended the day yesterday, down 13%. None of that was real. I mean, based like based on real information of financials of memory demand or any of that stuff going down. It was just based in these sort of like other pieces of information that just seemed not you know, like not relevant to making a decision on Micron, in my opinion. So uh of course, I wasn't super concerned about it. My uh viewpoint was that we're gonna find out much more information about memory demand and micron's actual in Micron's actual results and their commentary about it going forward from the call. So uh that still stands. And um yeah, yeah. I mean, one day later everything has already shifted because the financials were stronger than anybody anticipated.

SPEAKER_00 36:09

One other piece to highlight is it's also totally normal for a stock that has a run-up like this to have corrections um every once in a while. And this is something I talked about when I initially invested in Micron. It was in the middle of a correction, and I was looking at how Nvidia's price moved, and it often during its run-up took 20% to 30% uh corrections uh because nothing really moves up in a straight line or down in a straight line. Sometimes it feels that way when you zoom out, um, but often the road is a little bit bumpier, uh, especially when you're holding uh the stock.

SPEAKER_01 36:51

Yeah, I think that people who try to predict the corrections are kind of uh, you know, they're trying to do astrology in my view. And you know, like from my standpoint, those things are unpredictable. It's the bipolar nature of the market where it latches on to especially bad news in a pretty significant way and hammers down on it as like the sky is falling, everything is about to fall apart, um, which is what causes a 13% drop. Uh, right. But uh, but then you know, now it it's quite obvious that that bad news may have been overhyped and it wasn't actually bad news, and it was just a company deciding to shift their focus from one piece of product that is highly in demand but has lower margin to another piece of product that is also highly in demand and has higher margin. That just seems seems to make good business sense. Uh, why wouldn't you do that? And um yeah, so uh the the the um hit on the entire memory sector essentially was unwarranted, is what we're we're now finding out, especially because of the raise in guidance, not just because of what they just did in the last quarter, but because they're they're saying now next quarter they're gonna grow even more, by the way. So it's uh it's pretty incredible.

SPEAKER_00 38:14

Okay. Now let's go to listener questions. All right, Adrian, are you hey, hey, hey, how are you?

SPEAKER_03 38:21

Hey, good. Uh everybody's really happy in the chat, so there's a lot of celebration going on. Gotta love that. Um, but we let's go ahead. We're gonna do another uh micron question. Any thoughts on micron stock split?

SPEAKER_01 38:40

Yeah, I I think that uh um it wouldn't be unwarranted or unprecedented for the stock to have a 10 for one split uh at some point in the future in the future. It's hard to predict these things again because it's just a decision that their board would would make. Um I wouldn't be surprised if they make a decision even as early as today that they're gonna uh do a 10 for one stock split. Um that's quite possible. Now, generally, stock splits should not affect the stock price, but it it tends to affect it when it's already got huge momentum. The company is crushing it, uh, the stock price becomes more accessible to more people because they want to own whole numbers of shares. So it does happen to have a uh uh somewhat of a psychological impact on the on the stock price. Um, and it's quite possible it does happen at some point in the near future. That would be my expectation. But if it doesn't happen, it doesn't matter, just to be clear. Like uh Micron is still this worth the same amount from a market cap perspective, and um it should only go up and down based on its actual financials rather than any kind of split. So yeah.

SPEAKER_00 40:00

Yeah, no, we we can move on. That's fine.

SPEAKER_03 40:03

Okay. Um back to NVIDIA. What do you make of NVIDIA being completely flat for the last eight months, yet continuing to beat and raise the lowest forward PE it's had since 2019?

SPEAKER_01 40:18

Yeah, uh I I've commented on this before, and I'm curious to see what uh uh Dustin, your your view on this is. But my view is that NVIDIA just keeps getting better as a company and the stock price has been relatively flat. So it's the most attractive it's been, in my view, for the past couple of years. Um, so you know, I I tend to buy companies based on valuation and actual performance. Uh, I think valuation is extremely important, and I think NVIDIA has a good valuation. Now, why do I not own NVIDIA? Well, because the way I view my portfolio is that NVIDIA and uh Micron are in a similar risk category that the entire AI cycle, meaning uh maybe I shouldn't refer to it as a cycle, but the entire AI movement, um, if it slows down, will probably impact both companies. Now, it might impact Micron more severely than Nvidia, but it it's hard to predict these things. Uh, so both both of those have similar risk profiles, in my uh personal view. Uh, and therefore, my choice has been to invest in the the company that has uh the better price point, which in my view has been Micron as opposed to NVIDIA. Uh, but that doesn't make NVIDIA uh overpriced. I think NVIDIA is actually a pretty good price right now.

unknown 41:41

Yeah.

SPEAKER_01 41:41

And by the way, we say this throughout, like uh none of everything that we say is investment advice. This is just our opinions. We're sharing them, and you know, you know, hopefully you can sort of take what you will out of it. Dustin, what do what are your thoughts on this?

SPEAKER_00 41:54

So for the price being, or what do I make of the price being flat, which is the question, is I don't think much about it. The price doesn't really mean much to me outside of is it a good time to invest or a bad time to invest? Um, it it's no indication of how the company is doing. Uh, it's sometimes correlated, sometimes not. Um because the stock market gets it wrong often. And that's why uh you're able to have opportunities like uh a Micron, where you know we have these incredible gains in a short amount of time. Uh to Hamid's point, I agree. I think as their stock price has been flat and the company continues to execute well, it becomes more and more attractive. Um and also like Hamid, because it's so similar in a similar space as Micron, I wouldn't necessarily want to invest uh in both. Um, but yeah, I'm optimistic on uh NVIDIA. And if anything, the price being flat is a good thing, not a bad thing.

SPEAKER_01 43:01

Yeah. It sort of builds up uh a lot of pressure, uh, you know, that uh if it crushes uh it if it continues to crush its earnings, at some point that pressure blows up and is like, okay, like we were wrong. Like the the market would have to say we were wrong about uh NVIDIA not being able to grow as fast as they have been historically, if they if it just continues to perform. Uh and uh and then you see this sort of like rapid movement. And this is why sometimes stocks move very rapidly, 30, 40, 50 percent in a short period of time. And it's like, well, how is that possible? How is it possible that for a company to add $500 billion of market cap in such a short period of time? Well, those are the reasons why. Uh I feel like a similar sort of thing might be happening for Meta, for example, because the company just keeps getting better and better uh from a revenue and profitability standpoint and has all this massive investment in AI. Yet uh the company's uh uh stock price is uh uh is lower than it has been for the past year. Um so uh it's fascinating to see these things these opportunities pop up from time to time Adrian let's go to the next one.

SPEAKER_03 44:15

Okay. Um here's this person, listener. Micron plans to return 100% of excess cash to shareholders. What am I missing here? It's getting harder to find the bear case.

SPEAKER_01 44:28

Yeah yeah I mean like I agree with you. That's why I I I own it. The the bear case of course is the oversupply of memory uh chips which are interchangeable and therefore a memory price war in the reverse direction. Uh so far in the past year we've had a memory price war in the upwards direction because the customers are demanding access to more memory chips and they're driving the price up and the memory makers are benefiting from it. But if they have excess supply uh then it might have you know like obviously it would have the reverse effect uh and the question is when will that happen or if will that will happen? And that's the bear case essentially just to sort of like make sure that we um identify uh you know what the bear case is in a legitimate way that is a legitimate bear case uh potential but in in my view AI's growth has not peaked and will continue the the demand for AI will continue for some time in the future and I I don't know what that period of time is it might be one year maybe it's three months but it also might be 10 years it might be 20 years we might never have uh a stop for uh for demand for AI uh that is uh outpacing the supply so uh it's quite possible we might be in this type of scenario where demand for AI doesn't slow down for decades. Um I mean it's it's hard to predict um and therefore I'm not subscribed to the barricades on Micron.

SPEAKER_00 46:05

I do want to clarify I don't think Micron plans to return 100% of excess cash to shareholders. I think part of the excess cash will go back to shareholders as dividends or buybacks. But I hope as an investor that they actually invest some of their excess cash in RD and whatnot and because I want more than 100% of their excess cash as a shareholder. And I think I think they they can do that um with strategic investments.

SPEAKER_01 46:39

Well one one way to think of excess cash is that it's excess cash after having plenty of um money for RD and you know so so I I just take it on face value that like 100% of excess cash is after investments and after everything else that they want to do. But um all right let's let's go to the next question.

SPEAKER_03 47:01

Okay. What will it have to hit to consider a split?

SPEAKER_01 47:07

They could split at any time it doesn't have to hit a particular number it's a decision usually made by the board of directors. And some companies choose never to split or not to split like um Berkshire Hathaway is a perfect example of a company whose stock price is in the hundreds of thousands of dollars because they've never split right so uh it's it's not a must or requirement um it's not a uh threshold where if you hit X dollars you you generally split but um but there there tends to be this uh this common uh common thing among the stocks of companies like uh Apple and Tesla and others um that you know they have done splits to get their stock price down to about the $100 per share level once it gets over four or five hundred dollars on a consistent basis for long periods of time.

SPEAKER_00 48:02

So uh again it doesn't they don't have to choose to do that but uh with it being over a thousand dollars if it remains over a thousand dollars for some period of time they might choose to uh have a substantial split to bring it back down micron did hit new all-time highs I believe they're now up over 15% after hours amazing amazing um for the stock split does it make sense if they are going to do a 10 to one split does it make sense for them to do it sooner under the assumption which might be a bad assumption that they're going to let's say $2,000 a share where if they did a 10 to one split they're only bringing the share price down to $200 which maybe they could do a 20 to one split you you know that it doesn't there's no requirement they could do any number of split that they want so it's again one split yeah they could do it 23 to 1 that's funny.

SPEAKER_01 48:57

But um but but these are just sort of like board decisions and and uh you know like um you could see them having a discussion where maybe some board members are against splitting it and they're like all right why don't we shelf this until the next meeting or whatever. I mean it literally could happen at any time and it could also happen.

SPEAKER_00 49:18

Why would a board member be against doing a split?

SPEAKER_01 49:23

Just because of the rapid price uh increase in such a short period of time it's like let's allow for it to season and like um uh to be over a thousand dollars for longer than six months before we we choose to split you know so that could be an interesting argument but um but at some point I I suspect they don't want a $4,000 stock price or you know $2,000 stock price agreed it just doesn't make sense.

SPEAKER_03 49:49

So you ready for a new one?

SPEAKER_01 49:52

Yeah let's do it since Micron is spending a lot of money on infrastructure do you think it would affect the earnings like Meta no and and by the way uh Meta is spending a huge amount of capex on uh AI infrastructure which is hurting their uh free cash flow and I suspect you meant the the hit on free cash flow not earnings it's not actually hitting meta's earnings meta's because when they spend $100 billion on uh let's say data centers in a given year because they're depreciating that $100 billion over the course of six years they're only taking a uh you know you know one sixth of a hundred uh billion which is what like $15, $16 billion uh uh hit on earnings that particular year and they take another $60 billion the next year and so on. So so that's the reason that uh Meta's earnings has not actually been taking a hit. They're actually more profitable than they ever have been. And uh these data centers are showing that they uh they continue to be valued at uh at pretty high values even six years later. So the depreciation schedule this is something Michael Berry uh who is like one of the bear cases on the entire AI uh industry has been saying that um the six year cycle is too long of a cycle and they should be depreciating it in two or three years because AI memory AI chips are uh becoming so much better so quickly. But it turns out that his argument has been wrong this entire time and uh even six years later the data centers that were built six years ago still have some value today. So uh and by depreciating over six years they're assuming they have zero value uh after six years. So um so all of that said is that uh um meta's earnings are not getting hit their their free cash flow are getting hit and meta still has plenty of free cash flow it's not that they're they're they have to go borrow to do this as uh Google just did um now coming back to Micron uh one of the things that uh this particular person may have missed is that uh Micron's announcement today is that they they added $28 billion of free cash flow uh from their operations to their to their cash. So they are despite all of the spending that they're doing on building additional infrastructure manufacturing capacity they still have added a huge amount of cash to their cash um and um and in fact their cash uh their free cash flow is uh I believe equal or very close to equal their um their actual profits their gap profits so um micron is not suffering from this uh free cash flow issue that uh the other hyperscalers are um and micron is not in the business of building data centers so um the their their capex spend is on additional manufacturing facilities which are much cheaper to build than the data centers are so let's go to uh the next one because yeah running this time yeah hi Hamid what is your strategy on trimming or adding when it dipped I did add I think they're talking about Micron but was nervous since Micron was around 35% of my portfolio now most likely it will go to above 50% when to trim yeah that's a personal question for everybody I have already been trimming because it went over uh 30% of my portfolio it would have probably been over 35% uh if if I hadn't trimmed and um yeah I mean I as it becomes a larger portion of my portfolio uh it you know you know for me it makes a lot of sense to trim because like I uh I am a high risk taker but I'm I'm also not like a stupid risk taker because I I think anything can happen right like uh and and I just want to make sure that uh uh for the re even though I think something's possibility is relatively small I still want to protect my portfolio against it so um I don't anticipate adding more micron uh despite the fact that I think it's uh it's undervalued here and I only expect a trim going forward so that's that's my perspective on it. Dustin what what are your thoughts here?

SPEAKER_00 54:19

Yeah I I agree um I mean personally I try to maintain like a 20 to 25% like max allocation for any stock uh in my portfolio. But again that's a personal question it depends on how many positions you have um the other mindset in regards to like you keep growing a winning position is I think you just don't want to or for me I just don't want to get too greedy um you know where it's like oh this is untouchable uh because then you have days like yesterday where it's down 10% and maybe you're thinking I wish I was holding something else. So you just want to be able to hold enough shares of your positions where you're not making uh any like brash decisions. Uh you want to try to remain level headed ready to move on let's do it.

SPEAKER_03 55:11

Yeah okay let's give some other companies some love what do you think about Rocket Lab? Is it down because of SpaceX it's a great question.

SPEAKER_01 55:22

And in fact we uh Dustin and I were talking briefly about Rocket Lab uh earlier and um and we've been talking about Rocket Lab on uh on past episodes and uh the answer to to the question is I have no idea I I have no idea why it was up as much as it was uh it could have been because of SpaceX IPO um I have no idea why it's down as much as it is it's it's now down like something like 40% from the high watermark of like around $150 uh just a few weeks ago. And uh but but the reality is that Rocket Lab uh despite being an absolutely phenomenal company that I love and I love its founder and CEO Peter Beck. I think he's a fantastic CEO it the stock price got ahead of its skis meaning uh it's uh a significant portion of its future performance is already built into the stock price even at the $80 per share uh and the stock price had gone all the way to over $150 per share if I'm not mistaken. So um you know as it was going up and hitting all-time uh highs I was trimming because I thought that the stock price way may have uh gotten a little too far ahead and it has it's now down pretty significantly so uh I am not uh going back and buying those shares uh at least not at the current stock price I can't predict if it keeps going down or if it'll turn around from here and make new all-time highs those types of things I'm not in the uh I've never been able to predict but I basically react to what the market does and that's that's how I view it. Dustin what are your thoughts on blockchain?

SPEAKER_00 57:05

My my answer is slightly different. I think it's definitely down because of SpaceX. I just don't know why. And by that I mean when we were talking earlier I was saying this and you were like SpaceX is only down 1% today and I would I wasn't looking at price action as SpaceX. So that was surprising to me. And what I mean by I don't know why is I think it's very likely SpaceX was driving up the valuation and therefore you know is it driving it down because we have investors going from Rocket Lab to SpaceX? Is it because SpaceX has just been generally selling off and Rocket Lab's getting hit harder today I don't know. But SpaceX has definitely uh manipulated the space unintentionally it's just right it's just such a a big stock that it's gonna have like these these side effects in the market um but but I don't think this downward move from Rocket Lab is surprising to Hamid's point it it's been a bit overvalued recently um and we know or at least I believe SpaceX is extremely overvalued and as that goes down it's going to have these like negative consequences in the market for now. But it's all to me like a transitionary period um while the market kind of gets adjusted to having uh SpaceX. So eventually it'll all normalize and work itself out.

SPEAKER_01 58:35

By the way it it's probably worth noting that um SpaceX IPO price was 135 but on the free market the lowest price you could purchase it for on IPO day was 150 if I'm not mistaken. And it shot up from there to over $220 a share. And I like I was getting messages about it when it hit like when it shot up at 180 190 200 and and I was like my opinion has not changed. It's still overvalued right like uh and of course now at some point today you could have bought it for lower than the uh IPO day price of 150. I think it uh fell all the way down to 140 something 48 or something like that. Um so this goes to show you how important valuation is I mean when when companies again are undervalued uh eventually the the elasticity of the market will get them to a proper valuation which is in the upward direction. Now what what happens in the short time short term is like very fluctuating but in the long term it's in the upward direction. And when something is way overvalued again in the the elasticity of what happens in the short term is irrelevant. In the long term it tends towards the uh market valuation that is uh uh that is negative and some of that is happening for both SpaceX as well as Rocket Lab and and when their performances catch up with their stock price by the way they might could start going the other way but the market might be you know like uh punishing them for way too long when that happens right and and these are the things that creates opportunity in the market okay let's finish up with this one right what are what are your future plans for savvy trader and earnings hub in terms of features and growing the user base how can users share feedback about the platforms well uh we we read uh every email that go comes to support at uh either uh savytrader.com or earningshub.com so feel free to just email us at support um uh with any sort of feedback that you have and uh there's been lots of things that we've been working on um that are about to be released for savvy trader and some things that are work we're working on that are about to be released for earnings hub all super exciting stuff Dustin do you want to comment more on any of that stuff?

SPEAKER_00 1:00:59

I'm just gonna show it uh we have a big update for Savvy Trader uh we're rebranding the Discover page to be the explore page big difference I know but it's going to be a lot easier to find portfolios that you are interested in. So for those who don't know Savvy Trader is another product of ours it's a way to uh follow investment portfolios so here's um Shy's portfolio he's pretty popular on X so you can get a little bit of an overview of what he's doing and then subscribe uh either monthly or yearly if you're interested in uh this feature is not out yet though just just so that uh people know but I think I think it's we're releasing it today.

SPEAKER_01 1:01:46

So oh we are okay awesome I'm excited for that so give it a couple minutes and and separate from uh from this by the way both Dustin and my portfolio are available for free.

SPEAKER_00 1:01:57

Um and uh if if uh the links will be in the comment but if you just go to any past video there should be already links in the comments uh or if you go to savvy trader.com and search for our names either Hummied or Dustin it should come up but um but yeah yeah so so some other call outs for for uh the new feature is a but a bunch of filtering we didn't really have much filtering before so you could filter by sharp ratio volatility uh average hold time and you know find a portfolio that really fits your needs and you could also view like this is the the obviously the the card view here um but you can switch to the table view and get all the data kind of at once um so it's a a huge upgrade to the platform uh we're really excited about it uh and yeah if you if you have any feedback for us like Hamid said you could do um support at savvy trader.com or support at earningshub.com awesome and uh we're gonna and we didn't plant that question by the way that was that was totally organic I was wondering what why are you so ready to go with the demo but I guess it makes sense if uh we're about to release the uh release the feature today um I'm excited for that feature uh it's it's a good feature for discovering portfolios um all right uh well thank you so much for watching and listening and doing all the things appreciate it yeah every I'm just happy the earnings went well and it wasn't you know an hour of us crying uh together all right thanks everyone bye bye guys