Micron

Micron just posted the biggest quarter in its history. Revenue jumped to 41.5 billion dollars, more than four times what it made in the same quarter last year. Profit hit 28.2 billion dollars, and gross margins climbed to nearly 85%. Even better, the company guided next quarter to 50 billion dollars in revenue. Micron also locked in multi-year customer agreements, giving it revenue visibility that simply did not exist in past cycles.

Every major tech company is racing to build AI data centers, and Micron's memory is the bottleneck. Its cloud and data center chips alone brought in over 25 billion dollars this quarter, with gross margins above 80%. The newest HBM4 chips are already shipping in high volume for its biggest customer. Profit hit about 24 dollars per share, up from under 2 dollars a year ago, and the company expects even more next quarter.

Memory has always been a cyclical business. Micron's stock has crashed 50% or more several times since the 1990s, usually when too much supply floods the market. Rivals like Samsung and SK Hynix are racing to expand their own production. If all three ramp up at once, a price war could shrink today's near 85% gross margins fast. Sky-high profits like these are exactly the kind of peak that has reversed before.

To meet demand, Micron is spending heavily to build new factories. It poured more than 19 billion dollars into plants and equipment in just the first nine months of this year, nearly double last year's pace. Those bets only pay off if AI demand stays hot for years. If spending cools before the new factories come online, Micron could be left with expensive, underused capacity.