We think the memory stocks rally is not over yet with Micron posting its earnings on June 24th. We like both SK Hynix and MU and expect positive earnings by MU to have a positive impact on both stocks.

The setup into the June 24 print is a sharp positive inflection, driven by accelerating AI infrastructure capital flows and substantial pricing power across the memory sector.

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Fundamental Drivers & Margins

• Earnings & Revenue Inflection: Micron guided fiscal third-quarter revenue to $33.5 billion (+/- $750M), implying roughly 40% quarter-on-quarter growth. Consensus estimates sit at $19.82 per share on $34.8 billion in revenue, driven by rising HBM demand and gross margin guidance near 81%.
• Margin Quality & DDR5 Strength: The 81% gross margin guide is the single most-watched metric for profitability durability. Management noted that non-HBM (DDR5) margins have overtaken HBM, showing that earnings power is supported by the conventional DRAM upcycle as much as AI-specific demand.

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Competitive Dynamics & Capex Risks

• HBM Strategic Positioning: Micron secured HBM4 approval for NVIDIA's next-gen Vera Rubin alongside Samsung and SK Hynix, validating it as a third supplier. However, Micron remains on the 1-beta node for HBM4 while rivals move to 1c, making node progression a key watch item for pricing leverage.
• Capex Overhang: Capital expenditures above $25 billion this fiscal year and a step-up exceeding $10 billion next year represent a multi-year cycle. Since added capacity won't produce output until 2H27–2028, this creates near-term concerns around free cash flow and depreciation drag.

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Memory Sector Outlook

The overarching macro call is that this DRAM upcycle is structurally supported by AI capital spending rather than simple inventory restocking. TrendForce forecasts back-to-back contract price increases (~93–98% QoQ, then ~58–63% QoQ), underpinning strong pricing power across the memory space.

While heavy capex across all suppliers remains the classic mechanism that eventually ends cycles, the near-term tailwinds support our positive outlook for both MU and SK Hynix.