Susquehanna's Mehdi Hosseini: AI spending is ‘spend now, ask ROI later'

Market Trends & Industry Dynamics - The current cycle is driven by Nvidia, AMD, and Broadcom Aago buying, unlike prior cycles driven by distributors and OEMs/ODMs [3] - AI compute's future relies on advanced memory, sustaining the cycle through 2026 and potentially into 2027 [4] - Customer concentration exists throughout the AI supply chain, impacting suppliers like Micron [5] - Next-generation AI chips like Reuben will require even more advanced DRAM [6] - Memory spend is expected to pick up in the second half of 2026 due to supply constraints [8] - Vendor financing in AI is concerning, reminiscent of the solar industry in 2008-2009, potentially leading to consolidation and a pause, but the timing is pushed out to 2027 [9][10][11] Company Performance & Outlook - Media Ascent has a buy rating on Micron (MU) with a price target of $200 [1] - Micron benefits from a better pricing environment due to a richer mix of high-value products and disciplined spending [2] - Micron's pricing power is derived from Nvidia's need to buy memory for AI servers [3] - Micron's margins could expand towards 55% [6] - Micron's earning power is estimated to be around $20 [6] Competitive Landscape - Challenges exist for AAT in China due to local equipment suppliers catching up [8] - Lam Research is favored due to its over-indexing to memory spend and increased market share with a new product [8] - ASML is also favored as Taiwan Semiconductor Manufacturing Company (TSMC) is expected to be the largest spender in 2026, and ASML is over-indexed to TSMC spend [8]