In this email:

Break ups are always tough. Fortunately, mine have never cost me $7.7 Billion. Qualcomm might not be able to say the same.

Apple are getting ready to give them the “It’s not you, it’s me” chat. As one of their top-tier clients, they’re walking out the door with a whole bunch of cash. But is that enough to make Qualcomm investors panic? A better question. Is the drop from the news a reason to buy?

Call me crazy but I think the answer might be “yes!”

Apple relies on Qualcomm’s 5G modems to power its iPhones, but it's been working on an in house alternative for years. The transition could slice $7.7 billion off Qualcomm’s revenue by 2028. Not ideal.

But this isn’t breaking news. Apple haven’t been caught cheating out of the blue. Qualcomm already saw this coming. The new question is how do you replace a bombshell like Apple?

Qualcomm think it’s by diversifying into high growth markets like Automotive & IoT which is exactly what they’ve been doing to offset the Apple-shaped hole in its books.

Right now, Apple modems account for ~15% of Qualcomm’s revenue. Let’s take a look at the markets Qualcomm is moving into that I mentioned earlier.

Today these make up 22% of Qualcomm’s total revenue. By 2028, these two sectors will make up nearly 50% of total revenue.

I know so far I’ve been “Apple this” and “Apple that” but let’s take a second to appreciate what a beast Qualcomm is.

Even without Apple, Qualcomm dominates the 5G modem space, with a 55.7% market share. That’s almost double MediaTek (27.6%) & miles ahead of Samsung. And guess what? Samsung still uses Qualcomm modems in its premium Galaxy phones.

On top of that, Qualcomm’s Snapdragon X80 modem is still one of the best in the game, offering:
✅ 10 Gbps download speeds
✅ AI-powered latency reduction
✅ Industry-best carrier aggregation

Even with the drama, Qualcomms upside is huge.

If you account for ~7.4% revenue growth per year (yes, that’s factoring in Apple’s exit) & compare them to their peers, you’re looking at 34% from current price. A target right around $230ish.

Qualcomm was already great value before the sell off. Anything lower is just more bonus on the upside when we get there.

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Micron have been dragging their feet. They barely scraped 8% in the last 12 months. The S&P is up nearly 20% in the same period.

BUT everyone’s sleeping on what’s coming next.

AI needs Micron & that’s a beautiful spot to be in. Let me explain.

Micron isn’t just another semiconductor company. It’s one of the biggest players in DRAM & NAND storage.

What are those words? DRAM is like a computer’s short-term memory, handling real-time processing. NAND is its long-term storage, keeping data even when the power is off. All we really need to know is both are a must have for AI.

AI is going to be integrated into everyday life more & more. Guess what that means?

The need for high speed, high capacity memory chips will go insane. And that’s exactly where Micron thrives.

The King of AI, Nvidia’s CEO himself shouted out Micron’s HBM tech during CES for being twice as fast as the previous generation of tech.

The five biggest hyperscalers (Amazon, Microsoft, Google, Meta, & Apple) are expected to throw $280B into AI infrastructure in 2025. That’d be a 27% jump YoY. We’ve already seen it happening with huge amounts of AI spend showing up on the earnings reports this year.

That’s not a small number. The best part? AI models are getting bigger & thirstier for memory. That means Micron’s wallet share in AI spending is only going up.

If in doubt, blame China. That seems to be the trend anyway.

DeepSeek, a Chinese AI research lab, dropped a cost efficient AI model that scared investors into thinking AI memory demand was about to fall off a cliff. This is where you need to learn to breathe & not follow the crowd. DeepSeek is actually a good thing for Micron.

How could that possibly be? Well, think about it.

If AI becomes cheaper & more accessible to people & businesses, more people will probably use it right?

And if more people are using AI then that means there’ll be more demand for Micron’s memory chips. The complete opposite of what everyone’s panicking about.

Theories are great but the numbers always tell the real story. Micron’s numbers read like your favourite fairy tale with a happy ending.

Using consensus earnings forecasts, a fair valuation for Micron sits at $130 per share. That leaves a 41% upside from current price.

AI is just getting started, hyperscalers are doubling down & Micron’s got the golden ticket when it comes to AI memory demand. With huge operating profit growth & let’s call the valuation for what it is. A steal. This could be one of the best AI bets nobody’s talking about yet.

Some die hard fans Micron will see $250 which’d be 170% upside. I’m all for it but let’s reach $130 first 😅

That’s all! See you same time next week 👋

P.S Hit reply & let me know what you thought of this weeks newsletter. All feedback is welcomed ❤️