Micron, AMD seen on path to $2 trillion valuations as AI demand reshapes chip market

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Micron, AMD aim for $2T

Highlights

Ben Reitzes of Melius Research sees Micron and AMD on trajectories to $2 trillion valuations fueled by AI-driven memory and CPU demand.
AMD would need to demonstrate earnings per share above $50, far surpassing its $20+ 2030 goal, to justify an additional $1 trillion in market value.
Michael Burry predicts memory sector cyclicality will return as Chinese capacity expands, with options pricing implying a 7% move in Micron shares post-earnings.

AI architecture and memory economics support valuation case

As reported by CNBC, Melius technology research head Ben Reitzes says Micron and AMD are among the chipmakers that could be positioned to reach a $2 trillion market capitalization after major memory companies recently moved past the $1 trillion threshold.

Reitzes says AMD's case rests on the renewed importance of CPUs within agentic artificial intelligence, as system designs require more CPUs relative to GPUs. He says the company would likely need to show earnings per share power above $50 to justify its next trillion in value, implying its 2030 goal of more than $20 in EPS would need to rise materially.

For Micron, the argument is tied to computational efficiency gains in AI systems as memory usage increases. Reitzes says investor concerns are still being shaped by the sector's historic boom-and-bust pattern, even as he argues aggressive share buybacks in 2027 and 2028 could materially change that perception.

Cycle risks remain in focus ahead of Micron results

Not all investors share the bullish view on memory. Michael Burry, known for betting against the housing market before the 2007-2009 financial crisis, says memory cyclicality is likely to return as expanding Chinese capacity eases shortages that have supported strong pricing and margins.

In a Sept. 22 Substack post, Burry says the current shortage is likely to fade over the next two years as production catches up, leading to another down cycle for the memory market. That debate is drawing added attention as Micron prepares to report earnings after the bell on Wednesday.

Options market pricing implies a 7% move in Micron shares after the results. FactSet estimates cited in the report show expectations for earnings of $31.72 per share on sales of $51.33 billion, while the stock is up 0.8% at midday Wednesday and has gained 276% year to date.

Our earlier article on cycle-based market analysis outlined how Weiss Ratings uses long-cycle indicators to anticipate major market turning points and position investors for a potential sharp financial swing. We also noted that in periods of elevated volatility, this framework is presented as a way to find opportunities across stocks, ETFs and options while managing the risk of sudden reversals.

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