Micron Earnings

Micron report earnings this week & they feature in Amit's Top 50 WTI Exposure Winners spreadsheet. AK will correct me but not sure a semiconductor stock would be top-of-mind when thinking about winners from higher energy prices. Could be a nice example to use...

Micron release earnings Wednesday. The last two reports disappointed & the stock was punished. Indeed, over late 2024 / early 2025, specific factors were a consistent drag on performance; it was only macro tailwinds that helped offset & kept MU returns broadly flat.

Now we potentially have the opposite scenario unfolding: idio has become a positive driver of returns more recently putting extra emphasis on this week's results, the macro drag has eased but momentum may be stalling.

So, while company fundamentals will dominate the headlines MU holders should be aware of macro's importance - macro factors have a greater correlation with total returns that company specific factors. 

It's also evident looking at the attribution of MU's risk profile. Over the last month, macro volatility has become a significantly greater proportion of overall MU risk.

A breakdown of macro factor return attribution over the last month show that Energy & Metals have been the biggest propellors.

 

Overlaying MU with spot commodity prices reveals this relationship.

Today, commodities are amongst the stock's top positive exposures. MU is well placed to benefit from any Iranian geopolitical impact on crude oil spikes. Indeed, screening the entire S&P500 stocks for exposure to WTI, MU is in the list of the Top 50 relative winners.

Note, however, the dominance of negative exposure to corporate credit spreads. As ever, the macro picture is nuanced:

  • rising copper & WTI prices as part of a cmdty super-cycle that refelcts global reflation is good news for MU
  • if higher oil starts to morph into a business/consumer tax that hurts risk appetite widening credit spreads, MU would be vulnerable

Author
Qi Analytics Team

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