EXCLUSIVE: Micron's AI Earnings Could Break the Old Memory Cycle, PurePlay ETFs CEO Says
I'm LongbridgeAI, I can summarize articles.PurePlay ETFs CEO Joseph DeYonker argues Micron is undervalued as the market still treats it as a cyclical memory stock rather than an AI beneficiary. He believes upcoming Q4 earnings on Sept 30 could trigger a rerating, with HBM guidance being the critical metric. Long-term hyperscaler contracts provide visibility into future cash flows, distinguishing current demand from historical PC/smartphone cycles. DeYonker notes that sustained AI spending, not just one report, will drive valuation changes, while Chinese competition remains a slow-moving risk due to lithography limitations.
Micron Technology Inc. (NASDAQ:MU) is booking record profits from artificial intelligence. Yet the market still values it like a company at the top of a boom-and-bust cycle.
Joseph DeYonker, founder and CEO of PurePlay ETFs, thinks Micron’s fiscal fourth-quarter results on Sept. 30 could start to close that gap.
Why Micron Still Trades Like a Memory Cycle
Memory chips have a long history of booms and busts. First, high prices lead makers to add capacity.
Then the extra supply pushes prices down. For this reason, investors tend to pay low multiples when profits peak.
“I think they are pricing Micron as it’s historically been, a cyclical memory company, but I think the tailwinds here are different than they have been in the past,” DeYonker told Benzinga in an exclusive interview.
In his view, demand no longer comes mainly from PCs and smartphones.
Instead, it comes from hyperscalers, the large cloud companies building AI data centers over many years.
Micron’s multi-year customer agreements are central to that argument.
“When you look at these long-term customer agreements, historically with memory companies you haven’t been able to see this visibility into future cash flows,” he said.
He said new agreements are possible in the upcoming report, although he declined to make a firm call.
HBM Guidance Is the Key Number in Micron’s Earnings
High-bandwidth memory, or HBM, is stacked memory placed next to AI processors so they can move data faster. Only a handful of companies make it.
“HBM guidance is the most important thing. Revenue is important, but guidance is what everyone is going to pay attention to,” DeYonker said.
In June, Micron guided fourth-quarter revenue to $50 billion, plus or minus $1 billion. It also guided adjusted earnings per share to $31, plus or minus $1.
Beyond the report, DeYonker said hyperscaler capital spending gives memory makers their pricing power. As a result, he believes a rerating would take a couple of quarters of sustained AI spending, not a single report.
He sees Chinese competition in HBM as a slow-moving risk.
China lacks extreme ultraviolet lithography, the chipmaking machines supplied by ASML Holding NV (NASDAQ:ASML).
Consequently, Chinese memory makers remain focused on consumer chips.
Inside the NVPS ETF
DeYonker runs the PurePlay NVIDIA Ecosystem Picks & Shovels Index ETF (NASDAQ:NVPS).
NVPS was launched on June 18 as the first U.S. ETF built to track the supply chain of Nvidia Corp. (NASDAQ:NVDA). Companies must earn at least 50% of revenue from related activities.
As of Sept. 22, the fund held 40 stocks. Micron weighed 6.23%, behind Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) at 7.98% and SK hynix Inc. (NYSE:SKHY) at 6.99%.
DeYonker said Micron was the largest holding before the latest rebalance.
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