Micron is breaking the mold of the trillion-dollar company by multiple measures
Micron has joined the trillion-dollar valuation club – and it’s the black sheep of the flock, according to multiple metrics. While mega-caps like Alphabet , Amazon , Nvidia , Microsoft and Apple reached the trillion-dollar mark with the help of impresario CEOs and ubiquitous brand awareness, Micron’s rise as a component maker is due more to its location in rapidly changing tech supply chains during the explosive artificial intelligence boom. Micron is not alone in its ascent. South Korean memory chip makers SK Hynix and Samsung have also recently broken through to trillion-dollar valuations as the entire sector has increased in importance. Demand for memory is showing little sign of slowing down as higher-capability artificial intelligence cements a commercial foothold. Across memory products including DRAM, NAND and high-bandwidth, Micron is working to make the most of its strategic position in the AI value chain. “Quarterly revenue nearly tripled versus one year ago, and revenue for DRAM, NAND, HBM and each business unit reached new highs,” CEO Sanjay Mehrotra said during the company’s latest earnings call in March, projecting fiscal 2026 capital expenditure above $25 billion. “Micron is working to address the unprecedented gap between supply and demand.” A ‘low-key’ CEO Consumer electronics maker Apple was for a long time synonymous with its founder, Steve Jobs, who’s been the subject of biographies and a Hollywood biopic. Current CEO Tim Cook has likewise become a pop culture fixture. That’s true of several trillion-dollar CEOs, including Nvidia founder Jensen Huang and Amazon founder Jeff Bezos. Microsoft has spawned multiple executive celebrities like Bill Gates, Steve Ballmer and Satya Nadella, while Alphabet has produced Larry Page and Sundar Pichai. But Micron has had four CEOs since its founding in 1978, and none of them have been celebrities. CNBC’s Jim Cramer has described Mehrotra as “low-key.” “[Micron] is run by the contemplative Sanjay Mehrotra [who is] self-effacing and low-key. I know I’ve been far more promotional about Micron than he has about Micron’s prospects,” Cramer said Tuesday on his show. Formerly a ‘commodity,’ still a component Unlike Apple’s iPhones, Google’s search results and Amazon’s personalized shopping recommendations, Micron’s memory chips are back-end hardware components as opposed to consumer-facing products. Until recently, they were even considered commodities like soybeans or copper cathodes. “That’s how memory was before … when it played a small part, and it was a commodity. It’s no longer a commodity,” D.A. Davidson head of tech research Gil Luria told CNBC Tuesday. While memory has become more of a featured product in the AI age, with Nvidia and Micron co-designing their chips, it’s still essentially a component for infrastructure that users don’t interact with directly. Micron’s rise to the trillion-dollar level speaks to the increasing power of the sector and to the company itself. “Memory pricing is in its sharpest upcycle in a decade,” Ben Reitzes at Melius Research wrote in April. “[It] has inflected at a pace the industry hasn’t seen in years.” Traditionally more volatile Commodity prices are generally more volatile than stock prices due to their lower position in global value chains, making them more sensitive to basic factors like supply and demand. “Memory, when it was a commodity, used to be on the spot market on an invoice basis. Now they’re doing long-term deals with hyperscalers,” D.A. Davidson’s Luria said. “The memory companies are transforming themselves into far less cyclical companies.” Despite the shift, the propensity of Micron’s stock to move relative to the broader market – a metric known as beta – is still higher than many of its trillion-dollar peers, though it’s less than fellow chipmaker Nvidia. Nvidia has a five-year monthly beta of 2.18, compared to 1.07 for Microsoft and 1.26 for Alphabet, according to FactSet. Lower price-to-earnings Micron is in a league of its own among the megacaps when it comes to its price-to-earnings ratio. Many trillion-dollar tech companies trade with a P/E multiple above 20x while Micron’s is less than half of that. The apparent cheapness of the stock has been an object of frequent commentary. Some have cautioned against buying it on this basis due to the cyclic demand for memory that could eventually dampen sales, while others have noted its overall retail appeal. “Micron has been a retail favorite over the past few months,” Vanda analyst Viraj Patel told CNBC earlier in May. “Arguably, Micron is commanding a much bigger share of retail flow and attention.” An older company – but with faster growth Micron has been around since 1978, so it took the company nearly 50 years to reach a market cap of $1 trillion. That’s compared to 22 years for Google and 24 years for Amazon, as measure from their founding dates. Despite the long haul to $1 trillion, the company’s growth from a market capitalization of $500 billion to $1 trillion has happened in the blink of an eye. It took about a month and a half for that to happen. That’s compared to nearly 500 trading days for Nvidia, almost 640 trading days for Amazon, just over 1,000 trading days for Alphabet and more than 1,600 trading days for Apple. CNBC’s Deena Zaidi and Nick Wells contributed reporting.
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