Micron Makes the $1 Trillion Club a Little More Crowded

In this episode of Motley Fool Hidden Gems Investing , Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

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Travis Hoium: We have a new member of the $1 trillion club. Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman and Rachel Warren. Guys, we have a new member of the trillion-dollar club. I believe there's now 14 companies that are worth over $1 trillion. This used to be a really big number, and now it seems like we get a new company every week. But, Lou, the company that we're talking about is Micron . Passed $1 trillion. I thought it was interesting. I look back at their financials five quarters ago; they were free cash flow negative. Now they are the hottest stock on the market. This is a cyclical industry. Typically, a cyclical industry, but this is now also one of the most valuable companies in the world. Is this time around different for Micron?

Lou Whiteman: Maybe. But let's pause for a second and look at what they've done. This was a $350 billion company on Jan. 1. Guys, it's still May. They've had a heck of a career in a couple of months. Gained 19% yesterday, basically on an analyst price target move. These are not normal times. That said, there is a there there. These AI models need memory. Micron has done a decent job shifting its business just away from this brutal commodity cycle and towards a higher-value product. They are special among memory. The note in question, the note that triggered this move over $1 trillion. That analyst sees long-term contracts in plays through 2029. If that's correct, and I do think they're directionally correct anyway, this is not a fluke. This is not a one-time thing. This is the market responding to real demand, and with AI, just the numbers are all huge, but the demand is huge.