Micron (MU) Down 30%, Preparing for Reversal... Musk: "AI Memory Demand Increasing 200% Annually"

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Micron Technology (MU) has shown signs of a rebound after falling about 30% from its peak at the end of June. Elon Musk stated that the demand for artificial intelligence (AI) memory is increasing by 200% annually.

According to Nasdaq on August 4 (local time), SpaceX (SPCX) CEO Elon Musk explained that while memory production increases by about 20% annually, demand is growing at a rate of 200%. Musk stated, “If demand increases much faster than supply, prices will rise, according to the basic principles of economics.”

Musk cited memory supply as a limiting factor for the growth of AI companies, including SpaceX. He praised Nvidia's (NVDA) Vera Rubin architecture as the “best AI computer” and announced that SpaceX would build its AI infrastructure solely with Nvidia products.

SpaceX's quarterly capital expenditure surged from $2.8 billion in the same period last year to $18.4 billion. Data center contracts signed with AI companies like Google and Anthropic boosted performance, but the significant investment burden highlighted led to an 8% drop in the stock price in after-hours trading following the earnings announcement.

Musk projected that SpaceX would achieve annual revenue of $1 trillion by 2030. Jeremy Bowman, who contributed to Nasdaq, analyzed that if SpaceX expands its large-scale AI investments with hyper-scale cloud companies, memory prices could rise further.

Bowman assessed that Micron's upside potential has increased amidst tightening memory supply. However, The Motley Fool's investment analysis team did not include Micron in its top 10 recommended stocks, and Bowman disclosed that he holds shares in Micron and Nvidia.

[Article Key Summary]

-Elon Musk stated that while memory production increases by 20% annually, demand is increasing by 200%.

-SpaceX's quarterly capital expenditure surged from $2.8 billion to $18.4 billion, supporting the outlook for increased demand in the memory sector.

-Micron fell about 30% from its peak at the end of June, but memory supply shortages were presented as a factor for a rebound.

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