Quick explanation of Pascal’s Wager (for the smoothbrains)
400 years ago a dude named Blaise Pascal said:
“Should I believe in God?”
If God is real -> infinite upside (heaven, eternal profit).
If God is fake -> you lose basically nothing (you just lived a boring life).
So the rational move is to believe in God. Asymmetric bet. Limited downside, unlimited upside.
The Memory Wager (same exact logic)
Two possibilities:
1. MU is still just a cyclical memory run
Cycle peaks, prices roll over, earnings collapse.
But look at the valuation right now: 14x trailing P/E, 6x forward P/E
The market is already pricing in a cycle and expect the margins to crash in the next few years. The downside is already baked in. You’re not buying at peak cycle multiples. You’re buying after the market has already assumed the hangover.
2. MU is no longer pure cyclical
AI demand + HBM + multi-year take-or-pay contracts actually changed the game. Memory becomes infrastructure.
Then this thing re-rates to normal semiconductor / AI infra multiples like NVDA, MRVL, AVGO etc.
From 6x forward, we’re looking at 3-4x easily like SKHY, maybe even a lower P/E.
That’s the Micron/Memory Wager.
- Wrong about the structural thesis -> you own a stock that was already cheap for a cycle. Pain is limited.
- Right about the structural thesis -> easy 3-4x, life-changing money.
Same asymmetry as Pascal.
Limited downside if the bear case is true.
Explosive upside if the bull case is true.
Position: 100% MU, \~126 shares