Micron Technology(US:MU) Youtube·2025-09-23 20:33Core Viewpoint - The market is expected to rise, with a target of 7,200 on the S&P by the end of next year, driven by a healthy profit cycle and ongoing investment in AI [2][5][10] Group 1: Market Drivers - The four drivers of equities identified are profits, rates, sentiment, and macroeconomic factors, collectively referred to as the PRSM model [2][4] - The profit cycle is projected to show EPS growth of 11% this year and next, followed by 12% growth in 2027 [5] - Current rates are neutral to slightly positive, while sentiment remains neutral and macroeconomic conditions are improving after four months of decline [5] Group 2: AI Investment Cycle - The current investment cycle in AI is considered to be in its early stages, with tech equipment spending as a percentage of US GDP at 2.0%, significantly below the peaks of previous tech booms [7][8] - To reach the 2.9% level seen in 2000, tech equipment spending would need to grow by 47% on top of GDP growth, indicating substantial potential for growth [8] Group 3: Company Performance - Micron reported a strong earnings beat with adjusted earnings of $3.03 billion, exceeding estimates, and guidance for Q1 revenue of $12.5 billion, also above expectations [3][4] - Micron's gross margins are guided at 51.5%, alleviating concerns about price cuts due to competition [4] Group 4: Risks and Outlook - The primary risk to the equity market is the potential reduction in AI capital expenditure, which could negatively impact stock performance [10] - A further economic slowdown could also pose risks, but current market sentiment is favorable, with good news being beneficial for equities [11]