MU near-term earnings expected to be strong, but valuation viewed as risky due to late-cycle position and potential price peak.

Before we get into Micron's earnings tonight, let's take a look at the current state of the memory market . How would you describe the current supply and demand environment, and what is driving the strong performance we are seeing in these companies?

Well, the best I can say is that the stock is gone. The order books are almost full. There is high demand. I think that giant cloud computing companies are ordering huge quantities of these products, putting memory alongside chips, and doing so in every data center in America, as well as globally.

In fact, there are only three companies that do this. We have Micron, and Korean companies. I wish Micron would focus more on direct-to-consumer sales; it kind of abandoned that last year to focus on cloud computing giants .

William, take a look at your company's valuation. The stock is priced at $850 as earnings are due to be announced today, while our shares are currently trading at around $1073.

So, what can you expect to hear from Micron today? What do you expect the market's reaction to be?

For the quarter we expect to publish tonight, and indeed for the next two quarters from now, we believe we will see amazing results. We expect a significant overshoot tonight, and an overshoot for the next quarter, and we truly believe there is ample room for this cyclical rise in prices to continue.

In the long term, we expect these prices to peak as we enter the first half of the year, and possibly mid-2028, when Micron, Samsung, SK Hynix, and all their competitors begin to ramp up production to meet the huge demand from AI giants .

This is where we started to feel some concern, and this explains our pessimism about the valuation, as we believe that we are in the sixth or seventh stage of this upward cycle, and there are significant downside risks for long-term investors .

Yannis, I'd like to know your opinion on this as well. As I mentioned , you can see that we have almost completely sold out . Regarding expectations of further price increases and where they might peak, what is your view on that?

Well, it's not certain when it will peak. I mean , again, there are a lot of services coming online right now, and there isn't enough space to store them. I think there is another point worth mentioning, which is that the Chips Act eliminates this type of restriction on stock buybacks in December.

There are tremendous opportunities, which could lead to new and diversified cash flows into the company.

Of course, the market knows best. Many things are already priced, but I still think there may be some surprises. William, I'm just reviewing the predictions here. I mean, we expect DRAM revenue to increase by more than 300% year-over-year, NAND revenue by 400%, and we're looking at profit margins in the mid-eighties.

Which indicator will best illustrate the state of the memory market today ?

Yes, all the numbers are absolutely amazing at this stage. But we believe the most important figure to focus on is quarterly price growth. What we are specifically looking for is: Are we starting to notice a slowdown?

These were exceptional figures. We are talking here about hundreds of percentage points of annual growth for these revenues.

We even saw Micron's DRAM and NAND prices grow by 80 % quarter-on-quarter . So, what we are looking for is for this growth to remain strong, but to start to decline slightly over time, partly because we expect consumers to respond to changes in demand elasticity as a result of these higher prices.

We believe this could be the beginning of a slowdown in price growth, but in short, we expect price growth to remain impressive over the next three or four quarters .