Micron Trades at 6 Times Next Year's Earnings. The $38 Billion of Capacity That Ends This Cycle Doesn't Open Until 2028.

Memory specializer Micron Technology (NASDAQ: MU) trades adjacent $878 arsenic of this writing, astatine astir 20 times its trailing net but lone astir 6 times the net analysts expect implicit the coming year. Earnings are climbing truthful accelerated that adjacent year's expected fig dwarfs the trailing one. And the marketplace is paying astir 6 times for it due to the fact that it assumes the bully times extremity soon.

Memory has ever worked that way: High prices pull caller supply, and caller proviso ends the boom.

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But past Friday, the proviso that is expected to extremity this 1 got a terms tag and a schedule. SK Hynix committed astir $38 cardinal to 2 caller fabs -- and the archetypal of them doesn't unfastened a cleanable country until December 2028.

A roar inactive accelerating

The net the marketplace is discounting are not hypothetical. In its fiscal 3rd 4th (ended May 28, 2026), Micron's gross much than quadrupled twelvemonth implicit twelvemonth to $41.5 billion, up from $23.9 cardinal conscionable 1 4th earlier. Gross borderline ran 84.6%, compared to 74.4% successful fiscal Q2 and 37.7% a twelvemonth ago. Operating currency flow, meanwhile, much than quintupled twelvemonth implicit twelvemonth to $25.4 billion.

Management expects more. Guidance calls for fiscal fourth-quarter gross of astir $50 billion, gross borderline of astir 86%, and net per stock of astir $30.73.

Annualize that guided 4th unsocial and the banal trades astatine astir 7 times earnings.

Data halfway request is driving each of it. Micron's information halfway gross exceeded $25 cardinal successful fiscal Q3 (more than $100 cardinal annualized).

And successful prepared remarks for its June net call, the institution said manufacture request for DRAM and NAND "continues to importantly transcend manufacture supply."

The proviso effect present has a day

For a representation stock, what matters is erstwhile proviso arrives. On Friday, SK Hynix's committee approved 54 trillion won (about $38 billion) for the 2 caller fabs. The bigger piece, 35.2 trillion won, goes to a DRAM works successful Yongin, South Korea, called Y2. The rest, 19.1 trillion won, funds a NAND works successful Cheongju called M17.

I'd reason the docket matters much than the dollar figure. M17 breaks crushed successful February 2027 and opens its archetypal cleanable country successful December 2028. Y2 doesn't interruption crushed until July 2027, and its archetypal cleanable country opens successful June 2029.

And a archetypal cleanable country typically marks the commencement of equipping a fab, not the commencement of measurement output. Capacity decided connected today, successful different words, is 2028-and-beyond capacity.