TOP STORY
📈 Micron Soars 15% After Earnings But Ends the Week Down 6% - Here’s Why

🔴 It was another busy week in the markets: oil prices fell 10% as tankers finally started moving through the wartorn Strait of Hormuz. SpaceX ($SPCX) ended the week down 13%, pushing OpenAI to reportedly consider delaying its IPO until 2027.

💊 At the same time, the Semiconductor Index ($SMH) finished the week down 9% (its worst week since early April) while the S&P 500 Health Care Index rose 8% as investors rotated into defensive sectors. Major healthcare stocks like Eli Lilly ($LLY) and Novo Nordisk ($NVO) jumped ~9% each.

📊 Across the indexes:

• The S&P 500 fell -1.95%

• The Nasdaq 100 fell -4.24%

• The TSX rose +0.35%

🚀 Our top story this week is Micron ($MU), which posted what may be the greatest earnings quarter in memory chip history, jumping 15% after earnings.

🍎 We’ll also deep dive into Apple’s rough week, which fell 6% after the very memory chip demand that’s causing Micron to soar is forcing Apple to hike prices on its core products.

🛢️ But first, let’s take a slightly deeper look at oil and some big updates on the war front just this morning…

🛢️ Oil Prices Start Falling Back to Pre-War Levels… But Don’t Start Celebrating Yet

⛴️ With the US-Iran MOU signed, tankers started moving through the Strait of Hormuz again, 78 vessels on Wednesday alone, pushing Persian Gulf exports back to ~75% of pre-war levels and sending oil prices falling 10% to $72/barrel for the week.

✨ I highlight this in green as while falling oil prices are bad for energy stocks, they’re a sign that the war is ending and help counter the high inflation that’s driving the Fed to propose interest rate hikes (which are bad for investors).

⚠️ But before we celebrate… this weekend things got significantly worse. On Thursday and Friday, Iran launched drone attacks on commercial vessels in and near the Strait, hitting a Singapore vessel off Oman, and striking a tanker anchored near Kuwait, more than 800km from the Strait itself.

💥 Then, in the early hours this morning, things escalated dramatically. Ballistic missiles and drones struck the US airbase in Kuwait and the US Fifth Naval Fleet base at Port Salman in Bahrain. The US responded with missile strikes of its own, and Trump took to Truth Social, implying the US may be forced to resume the war:

😬 And with the market already pricing in peace, we might be in for some pain tomorrow if things continue to escalate…

🌟 But bad news aside, let’s get into Micron and its insane earnings this week. But first, a quick word from our sponsor this week: WisdomTree!

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TOP STORY
🚀 Micron Jumps 15% After Earnings But Ends the Week Down 5%

💾 Last week, we covered Micron ($MU) rising 17% in anticipation of earnings. The stock is up an insane 819% over the past year, leading to 80% of fund managers calling semiconductors ‘the most crowded trade in the market’.

🚀 Needless to say, a lot was riding on Micron’s numbers this week, and while expectations were high. Well, Micron more than delivered, posting earnings that TheStreet called “an unbelievably strong quarter” with “even more unbelievably strong guidance.”

📊 By the numbers:

• ✅ Revenue hit $41.5 billion vs. $35.7 billion expected, up +346% year-over-year

• ✅ EPS came in at $25.11 vs. $20.49 expected, up +1,369% year-over-year

  • ✅ Gross margin hit 84.9% (a new record for the company)

  • ✅ Data centre revenue hit $25 billion, now representing 61% of total sales

🔮 Better yet, the company said it expects Q4 revenue in the range of $49-51 billion (well above the $43.2 billion expected) and announced that it had signed 16 long-term supply agreements that gave $22 billion in cash deposits, 14 of which represent $100 billion in minimum contracted revenue.

📈 📉 Micron shares surged as high as 19% on Thursday, finishing the day up 15%. But the next day the stock fell, ending what would have been one of its best weeks ever down 5%. So what happened?

🇰🇷 What Happened: South Korean Jitters

📉 The volatility for Micron’s shares started on Tuesday when the South Korean stock market crashed 10% after MSCI announced it would not include South Korea in its “Developed Markets” watchlist.

🎯 Being on that watchlist matters because it determines whether trillions of dollars in global index funds are required to hold your stock (driving passive inflows). Since Micron's two competitors, SK Hynix and Samsung, are South Korean companies (and make up ~50% of the entire South Korean index), a crash in Korean stocks is effectively a crash in global memory.

🌐 This panic spread to U.S. chip stocks, causing the Philadelphia Semiconductor Index to fall 7%, with Micron dropping 13% in a single day.

🔄 Micron shares recovered on Thursday after earnings, but on Friday, it fell again as the same fears re-escalated after the South Korean market crashed another 8% (plus Apple and Microsoft announced major price hikes on their devices due to a memory shortage, which we’ll also cover today).

🐂 The Bull Case: A New Era in Memory

🎯 South Korean volatility aside, analysts were overwhelmingly on Micron’s side after earnings, with one analyst calling this a “New Era in Memory,” and BNP Paribas analyst Karl Ackerman describing the long-term supply deals as a “transformative” shift in the memory business model that makes it more like enterprise software and less like a commodity.

🚀 CEO Sanjay Mehrotra addressed skeptics head-on in the earnings call, arguing that 14 of the 16 supply agreements carry price floors "well above peak quarterly margins in any past cycle,” saying:

🏆 Per TipRanks data, analysts currently rate Micron stock a “Strong Buy” with an average price target of $1,526 roughly 35% above current prices.

⚖️ But of course, Micron is not without skeptics… but before we get into the cases against the stock, a quick word from our other sponsor this week - Public.

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TOP STORY CONT.
🐻 Micron’s Bear Case: Memory Has Been Here Before

📉 Micron isn’t without detractors. The most vocal this week was William Kerwin from Morningstar, who raised his fair value estimate for Micron from $455 to $850… which sounds bullish until you realize the stock is trading at $1,132, meaning in Kerwin’s model, Micron is 33% overvalued right now.

💬 According to Kerwin:

😰 Morningstar expects downward pricing pressure beginning in 2028, as new manufacturing capacity comes online all at once, exactly what happened in every previous memory cycle. Their most pointed critique: "in a downturn, only a small portion of total contracted revenue is truly guaranteed by customers."

⚠️ The bear case isn't about whether AI demand is real, as it clearly is. The question is whether the long-term supply contracts are as bulletproof as management implies they will be when the next downturn arrives. Memory has a long, painful, repeating history of supply catching up to demand faster than anyone expects.

😰 The question is: is this really the beginning of a new era in memory markets, like some analysts are saying, or the peak of the longest memory supercycle in history? And if you're thinking about buying Micron, that’s the main question you need to answer for yourself…

📱 The irony? While Morningstar worries about an oversupply of memory in the future, right now there isn't nearly enough… and nobody felt that more painfully than Apple this week.

🍎 Apple Sinks 6% After Memory Chip Demand Forces Price Hikes

📉 While Memory Chip demand causes Micron to soar, this week it caused one of the other Big Tech giants to take a major hit, with Apple ($AAPL) shares plummeting 6% on Thursday (its worst single-day performance in more than a year) after the company announced significant price hikes and blaming the AI-driven memory chip shortage as the driving factor.

😭 The industry has called it "RAMageddon," referring to the explosive growth of AI data centers consuming memory chips at an unprecedented rate, driving dramatically higher prices for consumer electronics.)

💰 Here’s how the prices changed (U.S. dollars):

• MacBook Neo: $599 → $699 (+$100)

• MacBook Air: $1,099 → $1,299 (+$200)

• iPad Pro 11-inch: $999 → $1,199 (+$200)

• iPad Pro 13-inch: $1,299 → $1,499 (+$200)

📲 Luckily, iPhones prices which account for the majority of Apple’s revenue, alongside AirPods and Apple Watch, are all unaffected by the shortage (for now).

🎮 Microsoft Follows Suit

🕹️ But Apple wasn’t the only one. This week, Microsoft ($MSFT) also announced it would raise Xbox prices by $100- $ 150 per console in the US, again due to memory shortages.

⚠️ Xbox’s own statement also warned consumers to expect another doubling by fall of next year, with Micron CEO Sanjay Mehrotra confirming that “tight conditions” will “persist beyond calendar 2027.”

🧠 Analyst Reactions

🔎 Evercore analyst Amit Daryanani said he was surprised by Apple’s price increases, but said it was “a clear signal that memory inflation is biting harder and faster than expected.” JPMorgan stated that these new prices could meaningfully hurt sales volumes.

🎓 Harvard professor and supply chain expert Willy Shih was surprised by the news, like many analysts, saying:

⚠️ As Tim Cook steps down in September, John Ternus (currently head of hardware engineering) certainly has a big challenge ahead of him. Ternus will inherit a company navigating both an AI transition and a memory cost crisis on day one.

📲 For now, iPhones, Apple's most important product, remain protected by component contracts Apple locks in well ahead of each annual iPhone cycle, but those contracts expire.

😰 And if tight memory conditions persist into late 2026 and beyond, the next iPhone lineup will face the same challenges that already hit the Mac and iPad line…

💡 In any case, it’s clear that the memory market is impacting more than just Micron, and it’s definitely something worth keeping a close eye on as we head into Q3…

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