What Is The Price Of Micron Technology’s New Profitability Floor?

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The chipmaker just unveiled a new business model that locks in remarkable profits for years, but the real question is what it might be giving up in return.

If you held Micron (MU) stock yesterday, congratulations. After the company reported a large quarter and even stronger guidance, the stock rocketed up more than 15.7%, and for good reason. Revenue of $41.46 billion blew past estimates, and the company’s forecast for $50 billion in the fourth quarter suggests the memory boom driven by AI is just getting started.

But the number that will echo long after this quarter’s headlines fade is 16. That’s the number of new “strategic customer agreements,” or SCAs, that management just unveiled. These deals, they said, will “fundamentally transform our business model.” For investors, this is the whole story. It reframes the reason to own Micron from a bet on a notoriously vicious cycle to something much more stable. The question is what that stability costs.

Image from Pixabay

What Are These “Strategic” Deals?

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