Micron's gross margin jumped from 39% to 84.9% in one year. That's not a typo. That's what happens when you sell something people need and you conveniently didn't make enough of it.
The memory crisis did this. Not innovation. Not efficiency gains. Not some breakthrough in manufacturing. They just stopped flooding the market with cheap chips while everyone else kept buying computers and phones like nothing changed.
Nvidia and Meta got beat on margins by the company that makes the thing you forget exists until your laptop costs $200 more. Nvidia's out here designing AI chips that hallucinate poetry. Meta's burning billions on a cartoon Mark Zuckerberg. Micron said we make RAM and stepped on their throats with a 45-point margin increase.
Retail traders saw this headline and immediately started Googling what gross margin means. Then they saw 84.9% and assumed it was a basketball score. Then they bought calls expiring Friday because a guy on Twitter with a laser-eyed profile picture said memory is the new oil.
Memory is not the new oil. Memory is memory. It goes up when there's not enough. It crashes when there's too much. Micron figured out you can charge whatever you want when Samsung and SK Hynix also decided to stop making so much of it. Groundbreaking stuff.
The best part is calling them the margin king like it's a sustainable throne. Wait six months. Production ramps back up. Prices collapse. Micron's margin drops back to 40% and every analyst acts confused about what happened. It's called a cycle. We've seen it seventeen times.
But sure. Crown them. Build the parade. Hire the marching band. Micron beat Nvidia on margins because they mastered the business strategy of not having enough inventory during a shortage.
Photo by on Unsplash
Leave a Comment