Micron Earnings Test Global AI Rally

The S&P 500 is up almost 8% year-to-date, and the Invesco QQQ ETF is up 16%. Taiwan's market is up 66%, semiconductors are up 72%, and the iShares MSCI South Korea ETF (EWY) is up about 100%.

Asian equities drove the iShares MSCI Emerging Markets ETF (EEM) to a two-decade breakout, with top country weightings including Taiwan (26.41%), South Korea (23.81%), China (18.93%), India (10.83%), and Brazil (3.59%). The EEM/SPY ratio is turning higher, indicating emerging markets' outperformance.

The recent pullback, attributed partly to new Federal Reserve Chairman Kevin Warsh's perceived hawkish stance and rising Treasury yields, impacts traditional global macro views. However, the author, Todd Gordon of Inside Edge Capital, LLC, asserts this is a structural, global AI revolution driving pure earnings growth, not a traditional rotation.

Micron, up 267% year-to-date, reports earnings Wednesday after the bell, with expectations for Q3 sales at $35.25 billion (279% growth), net income at $23.9 billion (996% growth), and adjusted EPS at $20.28 (962% growth). Fiscal year 2027 revenue is projected at $196.6 billion, with EPS at $121.77, reflecting historic growth.

Key metrics to watch include HBM4 ramp speed, Q3 gross margin consensus of 81.6% (a 47-year high), Q4 guidance, and high bandwidth memory pricing stability. Inside Edge Capital holds a 4.5% Micron allocation, up 150% since February 25, and a position in the Roundhill Memory ETF (DRAM).

Gordon believes any pullback will find support, leading to new highs in this historic AI buildout.