The Trade No One Sees: Tesla vs Micron

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TL;DR

Rebellionaire claims Micron will be more profitable in the next four quarters than Tesla will be in 2030, driven by a surging demand for memory.

Key Insights

Elon Musk memory purchase — Elon Musk plans to buy as much memory as possible from Micron, highlighting its importance.

Earnings per share 3x — Micron's earnings per share increased nearly 3x sequentially, showcasing rapid growth.

Nvidia's S&P 500 impact — Rebellionaire compares Micron's potential to Nvidia's 20% S&P 500 earnings growth impact.

Micron vs Nvidia market cap — Micron's market cap is one-tenth of Nvidia's, yet it's expected to grow earnings similarly.

PEG ratio undervalued — Micron's PEG ratio is significantly undervalued compared to typical growth stocks.

Deep Dive

Micron's Memory Advantage

Rebellionaire highlights Micron's potential, fueled by Elon Musk's commitment to buy memory. Memory is crucial for AI advancements, with companies like OpenAI and Google facing shortages. Micron, SK Hynix, and Samsung dominate this space. Micron's low forward PE ratio suggests market skepticism, but Rebellionaire sees opportunity.

Tesla's Memory Needs

Tesla's AI chips require increasing memory, from 8GB in hardware 3 to 144GB in AI5. This demand underscores the critical role of memory in Tesla's future, especially with robo taxis and Optimus robots. Rebellionaire stresses that Tesla's growth hinges on memory supply.

Micron's Financial Performance

Micron's recent quarter saw a 3x revenue increase to $24 billion, with gross margins doubling to 74.4%. Despite this, the stock fell post-earnings. Analysts raised targets, but the market remains skeptical. Rebellionaire argues that Micron's growth is sustainable given the memory demand.

Comparing Micron and Tesla

Rebellionaire compares Micron's near-term profitability with Tesla's long-term projections. Micron's next quarter could see $23 billion in net income, while Tesla's 2030 projections are speculative. The comparison highlights Micron's current strength against Tesla's future potential.

Market Mispricing

Rebellionaire argues that Micron is massively undervalued, with a PEG ratio far below typical growth stocks. The market's skepticism contrasts with Micron's robust growth and strategic positioning. Rebellionaire sees Micron as a potential 3x investment opportunity.

Takeaways

✓Micron's memory demand is set to surge, potentially outpacing Tesla's future profits.
✓Elon Musk's commitment to Micron underscores the strategic importance of memory.
✓Micron's financials suggest it's undervalued despite market skepticism.

Key moments

0:02Micron vs Tesla

“We believe Micron is going to be more profitable over the next four quarters than Tesla will be in 2030.”

0:22Elon's Memory Commitment

“Elon was basically saying that he would buy as much memory from Micron.”

8:49Micron's Earnings Surge

“They did roughly a 3x in one year. So, now they're doing 24 billion in revenue per quarter.”

34:34Market Mispricing

“Micron's trading at like a deep value stock a cyclical that's broken.”

17:58Micron's Future Potential

“We think earnings are growing in the future. Micron does have three factories coming online.”

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