blinky
07-20

$Micron Technology(MU)$  Let's consider the most extreme bear case for a moment. Suppose the AI market collapses, despite what IBM, ASML, and TSMC are saying. Suppose Micron's demand falls back to bear market levels, and it only earns $10 per share. Give that a 20x multiple for a bear case. Add to that, Micron has visibility on earnings through the end of 2027, and let's assume zero new orders—that could be about $300 per share in profit. Include take-or-pay contracts worth another $100 per share, and it amounts to a $600 share price in this worst-of-the-worst scenario, ignoring all AI spending reports, shortage reports, and reports of software company prices crashing. Let's also assign no value to Chinese companies overspending to add DDR4 chips.

From the current price around $850, even this extreme bear case points to a value, while a more normal case could be worth $1,500 and an extreme bullish case $3,000. Given that, the risk shorts are taking to bankrupt themselves seems pretty ridiculous.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment

  • Top
  • Latest
empty
No comments yet