Is Micron Stock Going Higher? You Need To Hear What Elon Musk Just Said
Complete. Here is the key summaryElon Musk highlighted a severe AI memory supply-demand imbalance, noting demand grows at 200% annually versus 20% supply growth. He identified memory as a key growth limiter and praised Nvidia's architecture. These comments signal strong bullish sentiment for Micron, suggesting potential price increases and continued sector tailwinds despite recent stock volatility.
Stock market investors were eagerly anticipating Space Exploration Technologies' (SPCX +9.43%) first earnings report as a publicly traded company on Tuesday afternoon, and the company had plenty of news to share.
SpaceX easily beat estimates on the top and bottom lines as it benefited from new data center contracts with AI companies like Google and Anthropic. However, the stock still fell 8% after hours on fears around capital expenditures, which rose to $18.4 billion from just $2.8 billion in the quarter a year ago.
However, the report had implications for other companies, especially in the AI sector, as much of that capex is going toward chips, and CEO Elon Musk said the company expected to reach $1 trillion in revenue by 2030, which entails massive capital spending to come.
Musk credited Nvidia, saying the company would build exclusively on Nvidia "because we think the Vera Rubin architecture is the best architecture. We think it's the best AI computer."
However, Musk also shared some nuggets on memory stocks that Micron (MU +7.61%) investors will want to hear.
Image source: Getty Images.
Elon Musk's thoughts on the memory shortage
Musk told investors that AI compute demand is growing much faster than memory supply, saying, "The memory output is increasing by around 20% per year... Ask yourself, is the demand increasing by 20% a year? No, the demand is increasing by 200% a year, maybe higher. If you have got demand increasing much faster than supply, Economics 101 would suggest that the price increases." He also said that the limiting factor on growth for his company and others is memory.
You don't have to read between the lines to see that his synopsis and SpaceX's plans to ramp up capex are highly bullish for Micron and its peers, and signal that memory prices could still be going significantly higher.
Investors may not see SpaceX's surge in capex as a positive for that company, but it's another tailwind for the memory sector, as SpaceX looks set to join the hyperscalers in spending massive amounts on capex to drive its AI ambitions.
NASDAQ: MU
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Where Micron stock goes from here
Even as AI stocks are rallying again and the Nasdaq Composite is hovering near all-time highs, Micron is still down nearly 30% from its peak at the end of June.
The biggest question about Micron is how long and how high the memory boom will go. After the recent sell-off, investors seem to have scaled back their estimates for the memory cycle, but Musk's comments are a strong indicator that demand continues to accelerate.
Micron looks like a good bet to move higher as the memory sector tightens.