Good Morning.
The AI infrastructure trade is sending a clear signal: memory is the new oil, and the companies that make it are minting money at a pace that would have seemed fictional two years ago.
Micron’s blowout quarter, Qualcomm’s data center pivot, and even the Cerebras stumble all point to the same underlying reality: the buildout is real, the supply is constrained, and the contracts are getting signed.
We also have big bank capital returns following the Fed stress test, a defense ramp-up tied to Iran operations, and a quiet auto-market coup in progress.
Let’s get into it.
1. The Lead · Semiconductors
Micron’s Revenue Quadruples as AI Memory Crunch Mints a Trillion-Dollar Chipmaker
Micron (MU) reported fiscal third-quarter revenue of $41.46 billion, more than quadrupling from $9.3 billion a year earlier and crushing the $35.84 billion LSEG consensus estimate, according to CNBC. Adjusted EPS came in at $25.11 versus the $20.78 estimate. The company guided next quarter to $50 billion in revenue, well above the $43.58 billion analysts expected. Gross margins expanded to 84.9% from 39% a year ago. Data center revenue alone surged more than sevenfold to $11.5 billion. Micron’s stock jumped 15% in extended trading, and shares are up roughly 700% over the past year, pushing market cap past $1 trillion. The company also disclosed 16 long-term supply agreements with data center operators and automakers, representing expected financial commitments of $22 billion, with binding purchase volumes designed to give Micron revenue visibility for capital investment decisions.
$50 billion: Micron’s guided revenue for next quarter, up from $11.3 billion in the same quarter a year ago, per CNBC.
The Bull & The Bear
▲ Bull: The memory shortage is structural, not cyclical. CEO Sanjay Mehrotra said supply shortages will take ‘considerable time to improve, even as we expect industry supply to improve gradually in 2028,’ according to CNBC. Locked-in long-term agreements covering more than half of future revenue give Micron the demand visibility to invest aggressively. At 84.9% gross margins, this is not a commodity story anymore: it is a picks-and-shovels monopoly with pricing power.
▼ Bear: A 700% stock run in one year embeds a great deal of optimism. Margins near 85% historically attract capacity investment and competition, and the supply/demand window could close faster than the CEO’s 2028 timeline implies. The long-term agreements are binding on customers only up to negotiated volumes; if AI capex cycles turn, take-or-pay structures get stress-tested quickly.
The Bull Street Take
I have said before that the memory layer is the most under-appreciated bottleneck in AI infrastructure, and Micron just proved it with a quarter that looks less like an earnings report and more like a toll-road manifest. When 16 of your largest customers are signing three-to-five-year contracts with binding volumes, that is not hype: that is a structural shift in how this industry prices and allocates supply. The gross margin story alone, going from 39% to nearly 85% in twelve months, tells you everything about where the pricing power sits right now.
—> Get the full insight on Micron by clicking here
Markets in Review · The Tape
Chips and Capital Returns Light Up Extended Trading
Markets in Review: Wednesday’s extended session was dominated by blowout semiconductor earnings, with Micron (MU) and Qualcomm (QCOM) each jumping 15% after the close on results and guidance that handily beat analyst expectations, according to CNBC.
The after-hours move in Micron and Qualcomm reflects a market that keeps finding new reasons to believe the AI infrastructure buildout has years, not quarters, left to run. Micron’s guided $50 billion in next-quarter revenue against an analyst consensus of $43.58 billion is the kind of beat that resets the tape for the entire memory complex.
On the banking side, the Fed’s release of its annual stress test, showing all 32 large banks can absorb more than $708 billion in losses, cleared the way for a wave of capital return announcements. JPMorgan Chase (JPM) authorized a $50 billion buyback and raised its quarterly dividend to $1.65 per share. Goldman Sachs (GS) boosted its payout to $5 per share, and Morgan Stanley (MS) raised its dividend to $1.15 and reauthorized a $20 billion repurchase program, according to CNBC.
On the energy front, the Strait of Hormuz remains open, with U.S. Energy Secretary Chris Wright confirming 72 ships carrying 19 million barrels transited in the prior 24 hours, per CNBC. The diplomatic picture remains fluid, but the physical supply disruption that rattled markets earlier this year appears, for now, contained.
Go deeper:
Micron (MU) surged 15% after hours on revenue of $41.46 billion and EPS of $25.11, both well above consensus, with next-quarter guidance of $50 billion setting a new bar for the memory sector.
Qualcomm (QCOM) jumped 15% after raising its 2029 non-handset revenue target to $40 billion from $22 billion and announcing Meta as a launch customer for its new Dragonfly C1000 data center CPU.
Cerebras Systems (CBRS) fell nearly 20% after its first post-IPO earnings report, with full-year gross margin guidance of 38%-41% disappointing investors even as Mizuho and Wedbush raised their estimates following the call.
What they’re saying:
“Our customers are recognizing that supply shortages in memory and storage will take considerable time to improve, even as we expect industry supply to improve gradually in 2028.”
Micron CEO Sanjay Mehrotra, per CNBC
2. The Tape · Semiconductors
Qualcomm Nearly Doubles Its 2029 Non-Handset Revenue Target, Lands Meta for New Data Center CPU
Qualcomm (QCOM) shares jumped 15% after the company raised its fiscal 2029 non-handset revenue target to $40 billion, up from a prior forecast of $22 billion, according to CNBC. The company is targeting $15 billion in data center sales by 2029 and adjusted EPS of over $18, versus the LSEG analyst estimate of $15.26. The new Dragonfly C1000 CPU, built for agentic AI workloads with a focus on power efficiency, will enter production with Meta in 2028. Qualcomm also separately acquired Modular, a startup whose software enables AI apps across chip architectures, describing it as an equivalent to Nvidia’s CUDA.
$65 billion: Qualcomm’s expanded automotive design-win pipeline, alongside a raised revenue target of $10 billion in auto by fiscal 2029, per CNBC.
—> Get the full insight on Qualcomm by clicking here
3. The Fed · Banking
Banks Pass Fed Stress Test, Unleash Capital: JPMorgan’s $50 Billion Buyback Leads the Pack
The Federal Reserve’s annual stress test found all 32 large U.S. banks can absorb more than $708 billion in projected losses under a scenario including 10% unemployment and a 39% drop in commercial real estate prices, while remaining above minimum capital requirements, according to CNBC. JPMorgan Chase (JPM) responded with a new $50 billion share repurchase program and a 10% dividend increase to $1.65 per share. Goldman Sachs (GS) raised its quarterly dividend 11% to $5 per share, Wells Fargo (WFC) guided an 11% increase to 50 cents, and Morgan Stanley (MS) boosted its payout 15% to $1.15 per share and reauthorized a $20 billion buyback. Critically, this year’s results do not affect capital requirements, as the Fed froze stress capital buffers through 2027 while it overhauls its methodology.
4. Deals · Defense
White House Presses Defense Contractors to Rearm, Awards Lockheed a $35 Billion THAAD Contract
The CEOs of Boeing (BA), Lockheed Martin (LMT), and Honeywell (HON) met with President Trump at the White House on Wednesday as the administration moved to replenish missile and munitions stockpiles strained by U.S. military operations in Iran, according to CNBC. The Missile Defense Agency awarded Lockheed a $35.3 billion sole-source contract for THAAD interceptors through June 2032, with $842.9 million obligated at award. The White House also asked Congress for $87.6 billion in supplemental spending, primarily for the Iran war. NATO Secretary General Mark Rutte endorsed the push, pointing to a roughly $300 billion order book for the U.S. defense industrial base.
$35.3 billion: Sole-source contract awarded to Lockheed Martin for THAAD interceptor production through June 2032, per CNBC.
5. The Tape · Autos
Toyota Is Closing Fast on GM in U.S. Sales as Hybrids Surge and EVs Stumble
Toyota (TM) is on pace to sell 1.25 million vehicles in the U.S. in the first half of 2026, up nearly 1%, while General Motors (GM) is projected to be down 7.2% to 1.33 million units, according to a Cox Automotive forecast cited by CNBC. The gap of roughly 83,000 vehicles would be the narrowest since Toyota briefly topped GM in 2021. Cox projects overall EV sales down 23.3% in the first half, while hybrid sales are up about 10%, underscoring the cost of GM’s decision to largely skip hybrids in favor of a full EV lineup.
+ Also on the Tape
Energy: Energy Secretary Chris Wright said U.S. naval escorts have ended Iran’s ability to close the Strait of Hormuz, with 72 ships carrying 19 million barrels passing through in the past 24 hours, according to CNBC.
AI Chips: Cerebras Systems (CBRS) shares fell nearly 20% after the AI chipmaker’s first post-IPO earnings report, with investors spooked by gross margin guidance of 38%-41% for the full year, down from 47% in Q1, per CNBC.
Banking: KBW analysts described this year’s Fed stress test as ‘going through the motions,’ noting that investors are focused instead on the pending Basel III Endgame proposal expected later this year, per CNBC.
Defense: Raytheon (RTX) received a $398.7 million award for Advanced Medium Range Air-to-Air Missiles, including sales to U.S. allies, alongside the Lockheed THAAD contract, according to CNBC.
Featured Contributor · Private Markets
Private Equity’s Best Magic Trick: “Exiting” a Company Without Selling It
by Oren Klaff, exclusive for Bull Street
A private equity sponsor hits the end of its five-to-seven-year hold and it is time to sell, but the exit market is frozen and more than 30,000 portfolio companies are jammed in the pipeline ahead of it. So who buys the company? Nobody. In his second piece for Bull Street, Oren Klaff walks through the trick PE uses to escape that corner: the continuation vehicle. The sponsor moves the company into a new fund it also controls, which makes the firm the seller, the buyer, the manager, the fee collector, and the storyteller all at once. A buyer and a seller technically existed, so technically it counts as an exit.
His point for anyone allocating into private markets: when public markets break, everyone can see it; when private markets break, insiders quietly build new structure around the problem. A continuation vehicle converts an unsold asset into a priced event without ever asking the open market to price it, and this is no longer obscure plumbing. Fund-manager-led secondary transactions hit $106 billion in 2025, up from $70 billion the year before, while PE firms sit on more than 30,000 unsold companies. That is the pressure point, and it is building.
Oren’s Take
Magicians don’t have powers, they have method. Private equity just learned to sell a company to itself and call it liquidity. When a sponsor tells you they exited a deal, the only question that matters is: exited to who? If the buyer looks a lot like the seller, the only thing that actually moved was the popcorn.
The Last Word
When your customers start signing five-year contracts to lock in supply, that is not a cycle. That is a new floor.
Bull Street is for informational purposes only. Nothing here is financial advice. Always do your own research.
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