The analyst argues that Micron's latest long-term agreement (LTA) signing indicates continued memory price increases rather than the end of the upcycle, implying a bullish stance on Micron.
Signing an LTA reduces available supply in the market, increasing pressure and FOMO among customers to secure stable supply, which supports continued price increases for memory makers.
I find it hard to understand why some people are interpreting Micron’s latest LTA signing as the end of the memory price upcycle. Signing an LTA ultimately means that the amount of supply in the market that has not yet been locked up is shrinking. In other words, the later a customer signs an LTA, the greater the pressure they face to secure stable supply, and the stronger their FOMO becomes. Over time, the fear of failing to secure enough memory will only intensify. That creates an environment where memory makers can secure LTAs on increasingly favorable terms. I do not think this LTA marks the end of price increases. If anything, I think it is closer to the beginning.
| Horizon | Raw move | vs SPY |
|---|---|---|
| 1 day | +15.7% | +15.6% |
| 1 week | -1.5% | -3.3% |
| 1 month | -12.2% | -12.9% |
| 3 months | — | — |
| 6 months | — | — |