Micron Technology, Inc. (MU) stock was almost flat during Wednesday's premarket session as risk appetite firms into the open and traders continue to position around the stock's longer-term uptrend despite a recent pullback from June highs. Nasdaq futures are up 0.29% while S&P 500 futures have gained 0.20%.
Futurum analyst Rolf Bulk said Micron and its memory-chip rivals could see more stable earnings as long-term AI supply deals reshape the industry and reduce its dependence on cyclical swings.
Long-Term Deals Improve Visibility
Bulk told CNBC on Wednesday that the memory industry is moving away from a market driven almost entirely by boom-and-bust cycles. He said long-term supply agreements are creating a new structure where a large share of revenue is locked in at strong gross margins.
Micron has said it expects about half of its revenue to come from these agreements over time, while SK Hynix has disclosed deals with 10 customers. Bulk said that shift should materially improve earnings visibility for Micron, SK Hynix Inc (SKHY) and Samsung Electronics Co Ltd (SSNLF), and could support higher valuation multiples over time.
HBM Margins Stay Elevated
Bulk said high-bandwidth memory margins are likely near peak levels after reaching roughly 75% to 80%. However, he does not expect margins to collapse because AI demand remains strong and supply stays tight. He expects margins to rise slightly in the back half of the year, then stabilize around 70% to 75% before gradually easing toward the end of the decade.
Bulk said those profitability levels remain unmatched across semiconductors, even compared with Taiwan Semiconductor Manufacturing Company Ltd (TSM) and NVIDIA Corp (NVDA).
CXMT Remains Behind
Bulk told CNBC that ChangXin Memory Technologies' (CXMT) strong IPO does not make it an immediate threat to Micron, SK Hynix or Samsung. He said CXMT's chips remain "around two to three generations" behind the incumbents. He said CXMT spends about 20% to 30% more on a cost-per-bit basis, making its products less competitive on performance.
Bulk also said CXMT likely will not catch up soon because fab buildout limits and restricted access to tools from suppliers such as ASML Holding NV (ASML) constrain its progress.
Top ETF Exposure
- iShares Semiconductor ETF (SOXX): 8.03% Weight
- Invesco S&P 500 Momentum ETF (SPMO): 8.39% Weight
- Invesco PHLX Semiconductor ETF (SOXQ): 9.78% Weight
Significance: Because MU carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
MU Stock Price Activity: Micron Technology shares were up 0.28% at $822.80 during premarket trading on Wednesday.
