Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.
Author: Chen Ming

On Thursday local time, in Pre-Market Trading, due to an earnings report performance guidance that was significantly below market expectations, the stock price of storage chip leader Micron Technology plummeted, as of the time of publication, $Micron Technology (MU.US)$ Micron's stock fell over 15% in Pre-Market Trading. Additionally, Bank of America Merrill Lynch downgraded Micron Technology's rating to neutral, from a previous rating of buy.

Earlier, the company disclosed its earnings for the first fiscal quarter of 2025, which ended on November 28, showing that while the quarterly revenue met expectations and Datacenter revenue increased by over 400% year-on-year, Micron's revenue guidance for the second fiscal quarter was clearly below market expectations. The company expects second quarter revenue to be 7.9 billion USD, nearly 1 billion USD less than analyst estimates, mainly affected by weak demand for Smart Phones and PCs.

Analysts have pointed out that Micron Technology is the largest computer storage chip manufacturer in the USA and one of the top three memory manufacturers globally. Its latest Earnings Reports guidance may impact investors' confidence in other similar companies worldwide.

The performance guidance fell short of expectations.

After the market closed on Wednesday, an important earnings report was released in the global memory chip sector.

Micron Technology expects its sales for the second quarter of fiscal year 2025, ending in February, to be approximately $7.9 billion, significantly lower than analysts' previous expectations of $8.99 billion; the EPS, excluding certain items, will not exceed $1.53, far below the market expectation of $1.92.

Although Micron has seen strong orders for components used in AI computing, the company is still facing weak demand from mobile phone and PC manufacturers—two markets that account for a large portion of its chip output. As of Wednesday's market close, Micron's stock had risen 22% this year, but after the earnings report was released, the stock plunged nearly 18% in post-market trading on Wednesday.

Analysts say Micron Technology's earnings report was primarily dragged down by the falling prices of DRAM memory chips used for mobile phones and personal computers. Due to weak consumer demand and oversupply, this memory market remains sluggish, and this part of the business contributes to more than half of Micron Technology's income (accounting for 75% of first-quarter revenue).

The earnings report indicates that in the first quarter of fiscal year 2025 (ending November 28), Micron Technology's total revenue was $8.71 billion, an increase of 84.3% year-over-year and 12.4% quarter-over-quarter, in line with market expectations; under non-GAAP, the net income was $2.04 billion, a quarter-over-quarter increase of 52%; EPS was $1.79, better than a loss of $0.95 per share in the same period last year and $1.18 in the previous quarter, and also higher than the analysts' average expectation of $1.76.

By business segment, the revenue from the Compute and Networking segment was $4.4 billion, setting a quarterly revenue record, accounting for more than 50% of total revenue, mainly due to demand for Cloud Computing Service DRAM and growth in HBM revenue; the Mobile segment revenue was $1.5 billion, a 19% quarter-over-quarter decrease, due to mobile customers focusing on inventory reduction, leading the USA to adjust supply strategies to meet Datacenter demand; the Embedded segment revenue was $1.1 billion, a 10% quarter-over-quarter decrease, as automotive, industrial, and consumer clients continued to reduce their inventory; the Storage segment revenue was $1.7 billion, a 3% quarter-over-quarter increase, setting a quarterly revenue record, mainly driven by record high revenue from Datacenter SSDs.

Micron Technology President and CEO Sanjay Mehrotra stated in the earnings report that the company's first-quarter revenue hit a record high, with Datacenter revenue exceeding 50% of total revenue for the first time, and Datacenter revenue increasing more than 400% year-over-year and 40% quarter-over-quarter, achieving a new high. However, Micron Technology also indicated that the surge in Datacenter revenue was not enough to offset the weakness in orders from Consumer device manufacturers. In this sector, clients have been dealing with a backlog of inventory.

Sanjay Mehrotra stated, "The PC upgrade cycle is gradually unfolding, and we expect PC sales growth to remain flat in 2024, slightly below previous expectations... Over time, we remain optimistic about the widespread adoption of AI personal computers." Mehrotra mentioned, "Although the consumer-oriented market is performing weakly in the short term, growth is expected to recover in the second half of the company's fiscal year 2025. We continue to gain share in market segments that are both the most profitable and have strategic importance, positioned very favorably to create significant value from AI-driven growth. The company’s revenue is expected to continue hitting new highs, with significant improvement in margins, achieving positive free cash flow in fiscal year 2025."

Tripartite balance of power.

Micron Technology, Samsung Electronics, and SK Hynix are known as the three major memory manufacturers globally. According to TrendForce, in the two main memory markets of DRAM and NAND, Samsung Electronics, SK Hynix, and Micron Technology hold the first, second, and third positions in market share, respectively.

Bloomberg points out that for a long time, memory chip manufacturers have become accustomed to the industry's booms and busts, and they now hope that the demand for a new type of product called High Bandwidth Memory (HBM) can be sustained. This technology is highly valued by manufacturers of AI computing systems, allowing Micron and other memory companies to achieve higher prices, although its production and deployment are complex.

Currently, Micron Technology has raised its global market size estimate for HBM chips in 2025 from $25 billion to over $30 billion. Micron Technology anticipates that by 2028, the total target market size for HBM chips will grow fourfold from $16 billion in 2024 to exceed $100 billion by 2030.

Investors are also betting on Micron Technology's strategic advantage in the high bandwidth memory chip market (HBM), which is commonly used in AI Chips to improve performance and reduce power consumption of AI systems. For example, Micron Technology's HBM products are being incorporated into$NVIDIA (NVDA.US)$the H200 AI chip and the newly developed most powerful Blackwell system, making Micron one of the few companies globally directly participating in the rapidly growing AI market.

Other types of memory are still subject to significant price fluctuations, depending on supply and demand balance. However, the three major memory companies—Micron, SK Hynix, and Samsung Electronics—are more stringent in increasing new production capacity. Micron stated that this means the issue of excess inventory will not be as painful as in the past.

In the DRAM market, as the hottest category within DRAM, HBM is favored by the market due to the demand for high-performance storage from AI Chips. Samsung Electronics, SK Hynix, and Micron Technology have developed and sold 12 HBM3E (fifth-generation HBM products) products, which are currently the most powerful products in the field. The competition among the three companies is fierce, with Hynix having a first-mover advantage, currently in a leading position. SK Hynix announced in September this year that it was the first to mass-produce the HBM3E 12-layer product and bulk supply it to NVIDIA. According to market research firm Counterpoint, SK Hynix currently holds a large share of the HBM market.

Samsung Electronics is behind its competitor SK Hynix in this regard, but is actively catching up. In its third quarter earnings report conference call for the period ending in September this year, it stated that its HBM3E is in mass production and sales; however, at that time, HBM3E accounted for less than 10% of HBM revenue, with sales expected to ramp up in the fourth quarter.

Micron Technology revealed during its earnings report call that its HBM3E has successfully supplied multiple customers and is expanding into more markets, with market share likely to increase further.

Editor/rice