Canada’s Condo Bailout and Apple’s Memory Price Problem
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What is the main topic discussed in this episode?
Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business.
Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.
If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time.
Welcome back to the Canadian Macro Investor Live, Friday Lives, lunch hour. We're a little early this week, 11.50. Today, what are we talking about, Simone? There's a lot of crazy stuff going on. I feel like we're going to talk a little. It's a very mixed bag. We've got the- Very mixed bag, yeah. The builder bailout, we've got some AI, we've got some micron, we've got inflation.
Apple raising prices, ripple effect into inflation. But I think overall, just consumer electronics, I think people need to upgrade computers, phones, even cars. There's electronics, everything, appliances, you name it. Anything that requires memory or storage in terms of flash memory, things like that, just get ready for higher prices.
Yeah, 100%. So let's start with that. Talk to me a little bit about that because I guess like Micron stock is hitting all-time highs daily, it feels like. And SanDisk too, right, I think?
Yeah.
How did Micron’s blowout earnings reveal surging AI memory demand?
Yeah, anything memory-related, SK INX would be another one that's doing pretty well. My crown is down today after being up, I think it was up like 15%, 16% yesterday. And usually we do earnings. I do earnings with Dan Kent on our Thursday episode. But I think this is worth mentioning. First of all, we've recorded some episodes in advance. We're taking like a week off next week. But if there is macro stuff, I'll bring my recording equipment and we might still have our Friday live next week. So... Stay tuned for that. But I think it's pretty relevant on the macro front. I mean, you're talking about businesses now like these memory business. Micron is around one point four trillion micro cap. Sorry, market cap.
So it's pretty, pretty massive in terms of companies. And you have a day increased revenue, 74 percent on a quarter over quarter basis and 346 percent year over year. Like that's I know you're not into stocks, Dan, as much, but even for someone who's not into stock, that's like crazy. And revenues came in 21% higher than they had predicted three months ago at the end of their second fiscal year quarter. So it's just a blowout quarter for them, for Micron here.
Yeah. Yeah. So this is translating to significantly higher storage costs basically for compute or like for Apple, like you said, Xbox as well. Like what, how does this impact the regular consumer? Cause I feel like this is a headwind also for this big AI and tech boom that we're discussing it.
Yeah, so you're seeing the headwind on several fronts. And the reason why it's so high, it kind of comes down to HBMs, high bandwidth memories. So essentially what's happening is Micron, SK Hynix are seeing massive demand there from obviously hyperscalers. So they're diverting capacity from DRAM, so stuff that you'd be using in your computer, such as using your phones, TVs, smart TVs, things like that. So they're diverting capacity for that because HBM is much more profitable for them. And the same thing for NAND, which is used for storage devices like SSD drive is on the kind of commercial or business side of things. It's much more profitable than solid state drives that would be for your iPhone, for your computer, you name it.
And over the last year, I don't know if you're aware of that, Dan, but prices for DRAM, depending on the type of DRAM that you're looking at, have increased three to four times over the last year. And it's around three times as well for storage as well, for memory. So you're seeing massive increases. implications here. Obviously, some of the hyperscalers, what they're seeing, it's higher costs for them, but they're also booking well in advance. So they started having these take or pay contract.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:01–1:33
2
How did Micron’s blowout earnings reveal surging AI memory demand?
1:33–14:14
3
Why are DRAM and NAND price hikes impacting consumer electronics and data centers?
14:14–21:34
4
What is the role of hyperscaler contracts (take-or-pay) in memory price stability?
21:34–26:50
5
How might AI compute demand contribute to a new wave of inflation?
26:50–33:19
6
Why did the US government step in on advanced AI model releases and what are the implications?
33:19–59:00
Speakers
3 identifiedMore from The Canadian Investor
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