Can Musk’s lengthy post really ruin Micron's super bull market?

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美股投资网2026/10/13 07:41

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By:美股投资网

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On Monday, US storage stocks fell, and the market's concern was very direct: If Chinese manufacturers ramp up supply, how long can companies like Micron continue making high profits?

In post-market reviews, many are still used to looking for reasons in oil prices and US Treasuries. These factors can explain the overall market pressure, but cannot clearly account for why storage stocks fell much more than others. Moreover, on Monday the US Treasury cash market was closed for a holiday, so the day's drop can't be directly attributed to a spike in spot Treasury yields.

The more direct reason is Changxin's announcement of technological progress.Subsequently, Musk's comments on China's manufacturing capability articulated the investors' biggest worry: Once supply ramps up rapidly, how long can storage manufacturers maintain high profits?

Musk's point was clear: Once China masters how to manufacture a product, their ability to scale up production is often very strong. But he also noted that more advanced HBM and complex stacking architectures would be harder to conquer. He was responding to discussions about this round of sell-offs, but we can't blame the whole day's losses on these remarks.

Putting these two statements together provides a complete assessment:

China's production expansion deserves attention, but the competitive pressures faced by different products are not nearly as synchronized as the market sell-off might suggest.

According to US Stock Investment Network, this round of correction first impacts investors’ confidence in how long high prices can be sustained.

Previously, storage stocks rose mainly because both demand and prices strengthened together. AI requires more memory, supply couldn't keep up, and manufacturers not only sold more, but also at higher prices.
Now, Changxin's progress has the market recalculating supply. Even if AI demand continues to grow, if new production comes online faster than expected, both future price and profit forecasts may need adjustment.

In terms of trading, this explains why stock prices dropped before companies actually lost orders. Capital will price in future profit changes in advance.

However, we can't conclude that the storage cycle is over just because of one day's decline.

When Changxin listed on July 27, US storage stocks also were sold off due to competition concerns. As of last Friday, Micron was still up about 261% year-to-date. These two facts together show that competitive concerns have always existed but haven't led the market to completely give up on storage profit expectations.

This time, we need to look further ahead: When will technological advances turn into deliverable products, and when will those products reach a sufficient supply scale?

Changxin plans to launch related server memory products before the end of the year. Next, it will depend on customer adoption, mass production yield rates, and continuous delivery to determine the market impact. Technological progress raises the likelihood of competition materializing, but can't be directly converted into next year's additional shipment volume.

Let's follow a more realistic line of reasoning.

Chinese manufacturers do not need to immediately capture the most advanced HBM. Suppose domestic memory first meets more Chinese customers' procurement needs, then orders that would have gone to overseas suppliers may be replaced.

Overseas manufacturers will have to find new buyers for these products, and if demand in other markets can't fully absorb them, price competition may intensify.

Therefore, even if the new products are mainly sold in China, they could still impact global supply and demand. To assess competitive pressure, one can't just look at whether Chinese chips are directly entering the US market.

Of course, if AI demand grows fast enough, the new supply could also be smoothly absorbed. What really determines prices is whether, after the supply increase, the market is still in short supply.

And this is the most sensitive point for storage stocks: Profits are often more sensitive to changes in selling prices than revenues are.

Here's a simplified calculation: If a product sells for 100 yuan and costs 40 yuan, the gross profit is 60 yuan. If the selling price drops 10% to 90 yuan and costs stay the same, gross profit falls to 50 yuan—a decrease of about 16.7%.

This is a gross margin decrease and can't be directly equated to a net profit decline. But it shows that a company doesn't need a wave of order cancellations for profit expectations to come under pressure. If sales growth and cost reduction can't offset the price cut, shareholder profits will decrease.

When it comes to specific companies, I would take different perspectives.

For Micron, China's capacity expansion is already a competitive variable that must be reflected in valuations, but this alone isn't yet enough to call a profit peak. I care more about whether Micron's average selling prices, product mix, and gross margin guidance change after new supply lands. Just looking at shipment growth risks missing pressure on pricing.

For SanDisk, this news focuses on DRAM and does not directly imply that its NAND business is equally impacted. But it's too early to call all the declines an “accidental casualty”—capital may already be lowering the expectations for high profitability across the storage sector. In the end, it will still depend on NAND’s own supply, demand, and pricing.

For downstream server and cloud companies, cheaper storage may ease procurement costs, but whether the savings are reflected in their profits depends on whether they also lower their prices or increase investment. Lower upstream profits don't automatically turn into downstream shareholders’ gains.

My view is that Monday’s decline is a reminder to reduce conviction in “long-term high prices,” but it does not yet provide sufficient evidence that storage profits have already turned. In the short term, stock prices may adjust first, but whether they rebound depends on if prices and earnings reports can support previous profit expectations.

What really needs vigilance is if new supply continues to come online, storage manufacturers’ shipments keep growing, but selling prices and gross margins weaken continuously—and improvements in product mix or cost reductions can't make up for the shortfall.

At that point, competition will have moved from news headlines onto the actual profit statements.

Therefore, for those holding storage stocks, going forward you shouldn't just ask how much more memory AI will need. You also need to ask: After supply increases, how much of the profits the company previously anticipated can still be realized? That's the key to whether the valuation can hold up.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Can Musk’s lengthy post really ruin Micron's super bull market?

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