AI models are becoming so large that the bottleneck is no longer just the processor (Nvidia chips) but the memory required to feed them. This is where a company like Micron comes into play. For many years, this business was boom and bust. Cyclical highs and lows that never really made it a solid long-term holding.
The company kind of has to prove it can maintain margins and continue to be able to satisfy demand in order to keep up this pace. The question for investors is whether this AI super-cycle has permanently broken the old boom-and-bust patterns.
What they could realistically end up doing is spending a ton of money on the supply side of things and once demand peaks, be left with a ton of oversupply. In that instance, margins would take a hit and I have no doubt the stock would get absolutely rocked.
However, if Micron has truly moved from being a vendor of parts to a long-term partner in the AI data center buildouts, the peak of this cycle may look less like a cliff and more like a steady plateau.
Regardless, the risk/reward here is just too much for myself to ever take a position. I am more of a picks and shovels AI investor, as you can see by my portfolio. ASML, TSM, etc.