00:00Micron shares have been on fire year to date. These results did arrive in a moment where
00:05the market has been a little bit stressed over the AI trade and sort of the sustainability of
00:10some of these figures. When you take a look at what we learned from Micron about 20 minutes ago,
00:16what does this tell you in terms of a temperature check?
00:19I mean, I think it tells us that we're earlier than most expect. And my sense is a year ago,
00:25we were in the third inning of this AI buildout. I now think we're in the second inning
00:29and specifically if you look at that revenue guide that they gave, that 300 and call it 40 percent
00:34revenue growth for the August quarter, that compares to 300 and just under 370 percent that
00:40they just reported in the May quarter. And that just shows you the sustainability to grow,
00:45continue to grow at these rates in the face of the law of large numbers is remarkable. And I think
00:52just to kind of quickly pull this forward to this is really the substance of the earnings tonight is
00:57what does this mean for the AI trade? And I want to put some specifics around it. The hyperscalers,
01:03as Matt mentioned in the previous segment, account for about 50 percent of Micron's revenue.
01:07The hyperscalers for next year, the street is expecting them to grow their CapEx, which is really
01:12a proxy for all the infrastructure build, by 22 percent. Now that compares to what will be up about 80
01:18percent in calendar 20 and calendar 26. Now, interestingly, a few weeks ago, that number for
01:25next year was 15 percent. So we've seen that inch up. But effectively, what we've seen tonight,
01:30and this is kind of the punchline, Katie, of your question, is that the street is going to get more
01:35comfortable at growth rates for the hyperscalers and the broader CapEx of 40 percent plus. And what that
01:42means is that these companies are going to continue to grow faster for longer than most investors
01:48expect. And despite all this skittishness within the market, this is just an over just a resounding
01:54endorsement that we are, in fact, earlier than the most believe in the build out. Well, you're hitting
01:59on something that I've been wondering about that, you know, perhaps we're getting spoiled by some
02:03of these numbers here because you think about Micron in the most recent quarter reporting a fourfold
02:09increase in revenue in the latest quarter. But then you take a look at revenue growth,
02:14what it's projected to be in fiscal 2027 growth of 76 percent and then seven percent in 2028. You
02:21could make the case if you were feeling a little bit bearish that maybe we are starting to see peak
02:26earnings. Well, I would I would kind of take that and build on that. And I think that the case
02:34is
02:34are investors ever going to get comfortable that we are, in fact, going to continue to grow faster
02:41for longer? Said another way is that if the market just continues to take these impressive blowouts,
02:47these impressive guides as an indication that we're going to see some material deceleration next
02:52quarter, if that kind of fear that we're always going to see a deceleration, if it happens to be 27
02:58or
02:5828, if that just continues to persist, then it's very difficult for the multiple on some of these
03:04companies to go up. We've, of course, seen that with NVIDIA. NVIDIA's numbers three months ago,
03:09the street was expecting mid 20 percent growth. They're now expecting 40 percent growth for calendar
03:1527. So it's gone up materially. But the stock over the last month has underperformed the Nasdaq up,
03:21or excuse me, down 8 percent versus the Nasdaq down about 5 percent. And so I think that that,
03:26to me, is that maybe there's the size of this build out. And I think some of these companies
03:32that have gone up so significantly, I do believe that they some of those will become more challenged
03:38to continue to really to grow. So, I mean, the Micron story is interesting. And obviously,
03:44whatever's going on with the Vera Rubin and its partnership with NVIDIA. But I do want to talk about
03:49just how this whole trade, the chip trade specifically, is broadening out. And as we're speaking right now,
03:54Gene, you might not be able to see it. But, you know, Qualcomm's holding its investor day. The CFO
03:58giving some relatively bullish commentary about the potential growth that Qualcomm has specifically
04:04in that AI data center space, obviously a broadening of their business away from just
04:09that smartphones that we all know and love them for. Do you buy into their ability and more importantly,
04:15some of these other companies ability to make a more meaningful pivot into AI and actually be a
04:20legitimate player? I mean, we've seen a lot of companies kind of have this new life,
04:25whether it's Qualcomm or Intel, and I guess Micron to some extent. And Romain, the simple answer is that
04:32I think we are just much earlier than what most believe. And I think that how this kind of continues
04:38to expand out, I think the next chapter that still is not fully appreciated is around personalized AI.
04:44And this is kind of the Qualcomm angle to this too. It's also the Apple and Google angle.
04:49A year ago, if we were having this conversation about what's next, we'd probably be talking a lot
04:53about what's going to happen with agentic AI. And obviously that now has kind of been a well-traveled
04:57theme. But I think this next chapter, that chapter being late this year into 27 and 28, will be around
05:04that personalized AI. I think you're going to see kind of a resurgence in consumer tech around that.
05:08And then probably after that, we'll start to see physical AI become something that is more potent.
05:14Keep in mind, despite all the talk of what we've seen in ride hailing and autonomy on that,
05:20this year, less than 2% of total Waymo and Robotaxi Uber Lyft rides will be autonomous. And so
05:26I think that that's kind of the sequencing, but overall, this is still broadening out. I think that
05:32the market is just uncomfortable, but we'll be proved wrong that this has got more legs to go.
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