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Micron’s December 9 Deadline,What Investors Need to Know · Earn Your Leisure

• 0:00
  Speaker 1: Let's talk about this. Let's talk about the AI sector
• 0:02
  Speaker 1: as a whole. It's been back and forth, trending, high, low. Sandisk,
• 0:10
  Speaker 1: we talked about that. Sandisk is almost $ 1, 000 down from
• 0:13
  Speaker 1: its all-time high. So it's been a little turbulence. It's
• 0:18
  Speaker 1: been turbulent. So let's talk about Micron specifically and then
• 0:22
  Speaker 1: the AI trade as a whole.
• 0:24
  Speaker 2: Yeah, I'm going to unpack this a little bit. Y'all
• 0:26
  Speaker 2: can chime in if you'd like. I'd appreciate it if
• 0:28
  Speaker 2: you did, actually. So last week, I left everybody off
• 0:31
  Speaker 2: with that December 9th date, and we're going to come
• 0:34
  Speaker 2: back to it. When I woke up this morning, I
• 0:36
  Speaker 2: knew that I'd get a bunch of text messages and
• 0:38
  Speaker 2: calls about, what's up with Micron? Why is it down
• 0:41
  Speaker 2: $ 21 pre-market? And then, you know, financial times. They reported
• 0:47
  Speaker 2: that CXMT, the Chinese semiconductor company, the CEO said that
• 0:52
  Speaker 2: they're going to be releasing their, I want to call
• 0:56
  Speaker 2: it a DRAM, chip, but it's kind of like DRAM adjacent.
• 1:02
  Speaker 2: And by that, I mean, yes, it is technically DRAM,
• 1:05
  Speaker 2: but what its purpose is for are very different. And
• 1:08
  Speaker 2: so when we think DRAM, specifically our audience, for sure,
• 1:11
  Speaker 2: you think Micron, you think SK Hynix, you think Samsung,
• 1:15
  Speaker 2: you're thinking high bandwidth memory. And so we saw all
• 1:19
  Speaker 2: those semiconductor companies, specifically in the memory sector, pull back
• 1:22
  Speaker 2: on that news.
• 1:22
  Speaker 1: Why?
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  Speaker 2: Well, they're saying, hey, we're going to change the way
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  Speaker 2: that memory chips are going to be organized, right? We're
• 1:29
  Speaker 2: going to make a smaller wafer that can hold more memory.
• 1:34
  Speaker 2: But what is the memory for, right? The memory that
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  Speaker 2: CXMT is making is for smartphones, for PCs, and consumer electronics.
• 1:41
  Speaker 2: And why is that important? Well, the second piece of
• 1:44
  Speaker 2: what I'm about to say makes it important, right? CXMT
• 1:47
  Speaker 2: has been banned and blacklisted by the United States government
• 1:51
  Speaker 2: and military. Now, A few months ago, we talked about
• 1:54
  Speaker 2: them because they were in the news saying that they
• 1:56
  Speaker 2: had a new outlook on memory. Apple had just heard
• 2:01
  Speaker 2: that memory prices were going to go up. They said
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  Speaker 2: Micron has raised them. They said, can we test? And
• 2:06
  Speaker 2: this was the whole issue with Trump and Tim Cook
• 2:09
  Speaker 2: at the time going back and forth. And eventually, you know,
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  Speaker 2: Apple said, okay, we'll go with what everybody else is doing. Meanwhile,
• 2:16
  Speaker 2: CXMT was still making things. Problem is this, right? When
• 2:20
  Speaker 2: we hear news like that, you say, okay, Well, and
• 2:23
  Speaker 2: I put this in the university earlier. If you think
• 2:26
  Speaker 2: about CXMT in terms of what they're building, who are
• 2:29
  Speaker 2: they going to sell it to, right? Are they selling
• 2:31
  Speaker 2: it to data centers? Because that's where we're seeing the
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  Speaker 2: highest growth when it comes to high bandwidth memory. Well,
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  Speaker 2: they can't sell it to the United States, which is
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  Speaker 2: the largest concentration of data centers being built. I think
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  Speaker 2: like 71% of data centers in the world are being
• 2:44
  Speaker 2: built in the United States. So you lose that as
• 2:47
  Speaker 2: a target audience. Who do you have if you're that company? Well,
• 2:51
  Speaker 2: you have domestic China, right? And so you got to
• 2:53
  Speaker 2: look at the developments of China and where they're going
• 2:56
  Speaker 2: in terms of memory, specifically high bandwidth. This is not that, right?
• 3:01
  Speaker 2: Like they can build out and build out the infrastructure
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  Speaker 2: to get to high bandwidth memory and using it at
• 3:07
  Speaker 2: the same width, but that's going to take time, four
• 3:09
  Speaker 2: to five years at minimum. And so the news is
• 3:12
  Speaker 2: kind of like, okay, they said they're doing something. It
• 3:15
  Speaker 2: really isn't relevant to what Micron's doing or SK Hynix
• 3:18
  Speaker 2: or Samsung's doing right now. But, here goes that crack, right?
• 3:21
  Speaker 2: We talked about the high concentration earlier. Here comes a
• 3:24
  Speaker 2: crack and here comes the news. I think the biggest
• 3:26
  Speaker 2: story is the December 9th story. And why we talked
• 3:29
  Speaker 2: about it is because, and I'm telling you right now,
• 3:31
  Speaker 2: December 9th, 2026 is the second anniversary of the CHIPS Act,
• 3:36
  Speaker 2: which Micron agreed to during, in 2024, where they got
• 3:41
  Speaker 2: 6.1 billion to build out infrastructure for their business. Now,
• 3:46
  Speaker 2: from that time, now I got to give you the
• 3:47
  Speaker 2: stock price at the time. Micron was trading at $ 80
• 3:51
  Speaker 2: at this time. Micron is now, well, I mean, it
• 3:56
  Speaker 2: touched 1,200 at its all-time high. I know we're trading
• 4:00
  Speaker 2: a little over 1,000 right now. And so at that time,
• 4:03
  Speaker 2: a part of the agreement for the 6.1 billion was
• 4:05
  Speaker 2: that they could not buy back shares, right? So you
• 4:09
  Speaker 2: hear a lot of times when companies have large operating profits,
• 4:13
  Speaker 2: they'll say, okay, we're going to do a stock buyback.
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  Speaker 2: Apple's done it, Nvidia's done it. What does that mean?
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  Speaker 2: I'm going to buy back shares, meaning that the existing
• 4:20
  Speaker 2: shares that are out in the world, they now go
• 4:22
  Speaker 2: up in value. And so you start to see companies
• 4:24
  Speaker 2: shoot up, right, when they have buyback shares. So on
• 4:26
  Speaker 2: December 9th, that is going to expire, meaning Micron can
• 4:32
  Speaker 2: now buy back their shares. They couldn't do it for
• 4:35
  Speaker 2: two years. Now the CFO of Micron said that they're
• 4:39
  Speaker 2: gonna give 100% of their operating margins back to shareholders,
• 4:44
  Speaker 2: which means in turn, huge buyback of shares, which you
• 4:48
  Speaker 2: would think would have Micron's stock price appreciate pretty quickly.
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  Speaker 2: Problem is this, there's a strike that is happening or
• 4:57
  Speaker 2: a pending strike. Now, this is something we really gotta
• 5:01
  Speaker 2: pay attention to because obviously Micron still operates in Taiwan.
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  Speaker 2: The two unions in Taiwan, which has about, I think,
• 5:08
  Speaker 2: 8,000 employees, they're preparing to say, if we can't figure
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  Speaker 2: out something by October 22nd, they're willing to walk off
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  Speaker 2: the site. You lose that many workers at a plant
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  Speaker 2: of that magnitude at a time like this in high demand,
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  Speaker 2: that disrupts the business. Here's what they want. This is crazy.
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  Speaker 2: They want 15%. I want to read this correctly. They
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  Speaker 2: want 15% of Micron's operating profits set aside permanently for
• 5:34
  Speaker 2: quarterly bonuses. This is what they're saying. Micron has offered
• 5:39
  Speaker 2: a one-time payment of $ 31, 000 to the Taiwanese employees. That's
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  Speaker 2: a huge gap. Let's do the math on it really quickly.
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  Speaker 2: The operating profit margin this quarter for Micron was $ 50 billion.
• 5:52
  Speaker 2: If you divide that by the amount of employees, that
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  Speaker 2: would be $ 2 million a quarter. $ 2 million a quarter.
• 5:58
  Speaker 2: That would bring that 87% that we used to talk
• 6:01
  Speaker 2: about in terms of operating profit margin down to $ 72.
• 6:05
  Speaker 2: Why is that important? Well, if they have to pay
• 6:08
  Speaker 2: employees 50% of the operating margin, and they just talked
• 6:12
  Speaker 2: about spending 100% of that margin to buy back shares,
• 6:16
  Speaker 2: that means that they have less money to buy back shares,
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  Speaker 2: which means that the stock price is not going to
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  Speaker 2: move the way people thought.
• 6:22
  Speaker 3: Deplete it.
• 6:23
  Speaker 1: Right?
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  Speaker 2: It's going to deplete it. So you got two things moving, right?
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  Speaker 2: You got the CXMT news, you got the strike, and
• 6:29
  Speaker 2: you got the buyback program on December 9th. Somehow, in
• 6:33
  Speaker 2: some way, this is why you're seeing Micron float between
• 6:36
  Speaker 2: 1,000 to 1,100, 1,000 to 1,100, and it can't get
• 6:41
  Speaker 2: quite past that 1,100 mark and get back up to
• 6:43
  Speaker 2: its all-time high because the one thing we know for
• 6:46
  Speaker 2: sure that the market does not appreciate or like is uncertainty.
• 6:51
  Speaker 2: And as long as there's uncertainty, you're going to start
• 6:53
  Speaker 2: seeing it move in this volatile 1,100 back to 1,000. Today,
• 6:57
  Speaker 2: it got down to 979. I saw it. Trust me,
• 7:00
  Speaker 2: I saw it. My account saw it as well. But,
• 7:02
  Speaker 2: the long-term story is still there, right? Will they figure
• 7:06
  Speaker 2: the strike out? They have to. This is not even
• 7:07
  Speaker 2: something that's going to be optional. In fact, Samsung, if
• 7:10
  Speaker 2: you remember in May, went through the same exact process.
• 7:14
  Speaker 2: People saw it. They said, all right, we hold power
• 7:18
  Speaker 2: as the people, as the employees. Look how much money
• 7:20
  Speaker 2: this company is making. We need to walk out on this.
• 7:22
  Speaker 2: They solved it before they went on the 18-day strike.
• 7:24
  Speaker 2: If you go back to May and look at what
• 7:25
  Speaker 2: Samsung and SK Hynix and Micron were trading at, look
• 7:28
  Speaker 2: what happens from like May 1st to June 25th to
• 7:31
  Speaker 2: all those companies. once that gets figured out. I think
• 7:34
  Speaker 2: we're on the cusp of that, right? You got obviously
• 7:38
  Speaker 2: domestic things we have here, midterms, treasury yields going up,
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  Speaker 2: that doesn't help technology. So all these things, this feels
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  Speaker 2: like a perfect storm and still this company has remained
• 7:48
  Speaker 2: resilient through it all, right? Still, I mean, when I
• 7:51
  Speaker 2: looked at where the support is at, it touched its
• 7:53
  Speaker 2: 20 day. I mean, it's very far off from its 200.
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  Speaker 2: I don't even want to look at the 400. It's
• 7:58
  Speaker 2: out of play at this point, but These are the
• 8:01
  Speaker 2: stories that you pay attention to, right? There's not going
• 8:03
  Speaker 2: to be one piece of writing that's going to tell
• 8:05
  Speaker 2: you all this. And so I said, look, Shadi, let
• 8:08
  Speaker 2: me at least give some context to it today. So
• 8:10
  Speaker 2: that's what we're looking at when we're talking about Micron.
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  Speaker 2: Do we still believe in it? 1,000%. Is it still
• 8:15
  Speaker 2: going to have an incredible 2027? Absolutely. If we get
• 8:20
  Speaker 2: through these turmoil winds, if you hear that the strike
• 8:22
  Speaker 2: is over, right, you might want to start reallocating things.
• 8:27
  Speaker 2: Because if that strike ends... And December 9th comes, that
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  Speaker 2: means that buyback is going to be coming as well.
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  Speaker 3: I'm going to say this. Even if the strike don't happen,
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  Speaker 3: this stock is a rock star stock. And we opened
• 8:39
  Speaker 3: up this year at $ 2.
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  Speaker 2: 95.
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  Speaker 3: It's currently at $ 9.
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  Speaker 2: 39.
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  Speaker 3: So these situations have happened before with a lot of
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  Speaker 3: tech companies that have had exuberant gains. This happened with Microsoft.
• 8:52
  Speaker 3: There's been issues with Apple, et cetera. They'll resolve and
• 8:55
  Speaker 3: get a deal. Going back to my point, though. When
• 8:58
  Speaker 3: you have a run like this, a lot of times
• 9:01
  Speaker 3: people are getting off of generational companies worried about short
• 9:08
  Speaker 3: weekly or monthly kerfuffles in the market. It's one of
• 9:12
  Speaker 3: the biggest mistakes I think you can make if you
• 9:14
  Speaker 3: were on this train to then get off of it.
• 9:17
  Speaker 3: Stock club don't kill me.
• 9:19
  Speaker 2: I'll give a couple of prices.
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  Speaker 1: I had.
• 9:24
  Speaker 3: For the month of October, and potentially going.
• 9:27
  Speaker 4: To $ 820. 87 as an area that I won't give our
• 9:33
  Speaker 4: low-to-bill price. But the thing is, when the stock goes
• 9:36
  Speaker 4: up 5x or 6x, you then have to know the
• 9:38
  Speaker 4: math of how much it could pull back even without
• 9:43
  Speaker 4: the political news.
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  Speaker 2: This happened with NVIDIA.
• 9:45
  Speaker 3: When NVIDIA got on an incredible tear, and when it
• 9:48
  Speaker 3: started to come down, and it happened with Microsoft earlier
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  Speaker 3: this year, people start calling for the death of these companies,
• 9:54
  Speaker 3: and I think it's a tremendous mistake. Um, this company
• 9:59
  Speaker 3: is too valuable, not only to the sector that is in,
• 10:02
  Speaker 3: but the country that is in, and it's too important
• 10:06
  Speaker 3: to the AI story. Um, for everyone here in stock club,
• 10:08
  Speaker 3: if it falls to, uh, market monies, I mean, nine, 1884,
• 10:14
  Speaker 3: I would like to take a position. And then if
• 10:16
  Speaker 3: it goes to the price that I called earlier, uh,
• 10:18
  Speaker 3: I would love it, but I think too many people
• 10:20
  Speaker 3: are getting off on wishing for the death of these companies.
• 10:25
  Speaker 3: And even the move today, and I'm like, that's not
• 10:27
  Speaker 3: really a.
• 10:28
  Speaker 2: Parabolic move to the downside.
• 10:30
  Speaker 3: If it's up 7X over the last two years, continue
• 10:35
  Speaker 3: to hold. Too many of us are playing short-term gains.
• 10:40
  Speaker 3: Like even when I do the, if you bought this
• 10:42
  Speaker 3: stock five years ago, it would be up 17. This
• 10:45
  Speaker 3: is one of those companies. The best of this company
• 10:48
  Speaker 3: has not, we've not seen the best of this company yet,
• 10:52
  Speaker 3: and it's going to continue to print high gains, hold
• 10:56
  Speaker 3: for the long term. I've given two prices. If I
• 10:59
  Speaker 3: made you money, please put yes in chat. Just like
• 11:01
  Speaker 3: when I call NVIDIA falling to 89 a couple years ago,
• 11:05
  Speaker 3: this is one of those moments you're going to be
• 11:07
  Speaker 3: able to buy and then hold it for a long
• 11:09
  Speaker 3: period of time and make some more money from it.
• 11:11
  Speaker 2: Don't get off this train yet.