Micron’s Capital Spending Growth Overshadows Booming Sales

Summary

Bloomberg Intelligence Podcast Summary

Episode: Micron’s Capital Spending Growth Overshadows Booming Sales
Date: March 19, 2026
Hosts: Paul Sweeney & Scarlet Fu (Bloomberg Intelligence)
Key Guest: Jake Silverman (Bloomberg Intelligence Semiconductor Analyst)

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Overview

This episode of the Bloomberg Intelligence podcast delves into Micron Technology’s recent earnings, with a focus on the company’s surging capital expenditures and booming sales figures. The conversation explores whether significant capex is a cause for investor concern, the ongoing supply/demand imbalance driven by AI, memory pricing trends, and how extended customer agreements may impact the notoriously cyclical memory market. The episode also features quick updates on the restaurant sector (Darden), logistics (FedEx), and U.S. monetary policy reactions, providing listeners with a broad look at current market dynamics.

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Micron Technology: Capital Spending vs. Sales Growth

Segment Start: [02:04]

Key Topics & Insights

• Earnings Performance and Stock Reaction:

  • Micron’s sales numbers are very strong, yet the stock is down ~3% on the day.
  • Analysts note continued “really strong performer over the last periods.”
  • Main concern: Whether capital spending is an issue for investors, or if the market is focused on the sustainability of the current cycle (pricing, margins).

• Capex and Demand Imbalance:

  • Jake Silverman:
    • “...what’s going on with Micron is more so focused on where the cycle is at.” ([02:32])
    • Aggressive price increases for memory, with May quarter showing “very strong double digit pricing growth.”
    • AI remains the primary demand driver, leading to a “very strong supply and demand imbalance.”
    • Elevated capex is necessary: “If they’re unable to match spending, then they’re not going to be able to meet the demand of their customers.”

• Memory Chip Pricing Outlook:

  • Micron does not provide explicit future pricing guidance.
  • Jake Silverman suggests pricing increases may peak soon, though “pricing still has a few more legs to go” due to supply constraints.
  • “...there’s not going to be a lot of additional supply for the next 12 to 15 months... As a result, we think pricing still has a few more legs to go.” ([03:43])

• Competitive Landscape:

  • Primary day-to-day competitors are Samsung and SK Hynix; Sandisk has a more limited overlap.
  • Nvidia is a top customer, especially for high bandwidth memory (HBM), not a competitor.
  • “Nvidia is one of their biggest customers... their competition is Samsung, it’s SK Hynix, and then to some extent Sandisk.” ([04:50])

• Micron’s Advantages & R&D:

  • Competitive edge is tough given market commoditization, but Micron’s focus is on:
    • Cost efficiency
    • R&D spending (keeping up with hyperscaler demand and evolving HBM standards from HBM3e to HBM4)
    • Specific technical advantages: pin speed (bandwidth), lower power consumption
  • “It really is competing on costs and the economics of their business.” ([05:23])

• Extended Customer Agreements:

  • Recent shift: Customer agreements extend up to 5 years—unusual for the industry.
  • Jake Silverman:
    • “Very unprecedented. The company hasn’t given us a lot of details... But it does seem like these agreements are different than the LTA’s we saw just a few years ago...” ([06:35])
    • Could help reduce the typical swings of memory market cycles.

Notable Quotes

• “What’s going on with Micron is more so focused on where the cycle is at.”
  — Jake Silverman ([02:32])

• “If they’re unable to match spending, then they’re not going to be able to meet the demand of their customers.”
  — Jake Silverman ([02:32])

• “...there’s actually a constraint in the ability to put up additional clean room space... So as a result we think pricing still has a few more legs to go.”
  — Jake Silverman ([03:43])

• “Very unprecedented. The company hasn’t given us a lot of details... but it does seem like these agreements are different than the LTA’s we saw just a few years ago...”
  — Jake Silverman ([06:35])

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Restaurant Sector Spotlight: Darden Earnings

Segment Start: [09:03]

Key Points

• Performance:

  • Darden showed strong top-line results (4% same-store sales growth) despite severe winter weather affecting operations.
  • Margins missed expectations—“they didn’t really see the operational leverage from it.” ([09:25])
  • High beef prices notably impacted their Longhorn chain.

• Commodity & Pricing Challenges:

  • Commodity inflation is a growing concern.
  • Darden plans to raise menu prices; believes they have room due to historically being “underpriced” vs. competitors and general inflation.
  • “They think they have some room. But if we see elevated gasoline prices, if we see a prolonged conflict in the Middle East, you know, it’s really going to weigh on restaurant spending.” ([10:22])

• Consumer Dynamics:

  • Increased tax refunds are a tailwind but offset by rising gas prices and stagflation worries.
  • “When people's budgets get pinched, they spend less at restaurants. Margins get squeezed... just a tough climate.” ([10:22])

• Labor Market:

  • Labor availability and costs have improved slightly (“Wage inflation about 3% now vs. 4-5% since 2020”). ([12:08])

Notable Quotes

• “Despite all that, they still were able to put up 4% same store sales comp. The problem was... they didn’t really see the operational leverage from it.”
  — Michael Halen ([09:25])

• “Stagflation is not a good situation for restaurant consumers. We saw that in the stocks performances last year.”
  — Michael Halen ([10:22])

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Global Logistics Pulse: FedEx Earnings Preview

Segment Start: [15:50]

Key Points

• Restructuring and Strategy:

  • FedEx is restructuring its European operations and combining ground/express networks to become more nimble.
  • Targeting growth in B2B and higher-margin B2C business.

• Geopolitical and Cost Headwinds:

  • Impacts from Middle East conflicts are affecting global shipment routes, raising costs and causing lost volumes.
  • Lee Klaskow: “The Middle east has become a huge hub for freight between Europe and Asia and that has been dislocated.” ([16:24])

• Core Business Trends:

  • Parcel business: Volume and price growing in low-to-mid single digits.
  • LTL (less-than-truckload) division faces challenges due to weak industrial economy—FedEx to spin it out.

• Comparable Trends to UPS:

  • FedEx and UPS face similar challenges and industry trends; updates from one generally shed light on the other's situation.

Notable Quotes

• “Volume looks like it’s probably going to grow... not really expecting that much new news because they just had an investor day... But we do expect to get a lot more color about what’s going on in the Middle east.”
  — Lee Klaskow ([16:24])

• “They’re both very, very similar. They’re both going after similar growth businesses... I think there’s more similarities than there are differences.”
  — Lee Klaskow ([19:42])

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U.S. Interest Rates & Macroeconomic Reactions

Segment Start: [22:13]

Key Points

• Fed Meeting Takeaways:

  • The latest Fed meeting was less impactful than central bank meetings abroad (notably the Bank of England).
  • Jay Powell signals no rush to cut interest rates; awaits confirmation of his successor.

• Market Reactions:

  • UK rates news had an outsized effect on global bond yields, with knock-on effects in U.S. Treasuries.
  • “[The Bank of England] implied 50 basis points of interest rate hikes... that’s really what’s roiled the entire US market.” — Ira Jersey ([23:57])

• Fed Policy Path:

  • Analysts had expected interest rate cuts toward just below 3%. But with rising inflation expectations and global developments, the Fed will likely be much more cautious.
  • Job market weakness (e.g., monthly job losses) would likely be prerequisite for further cuts.

Notable Quotes

• “It was probably the least important of the 17 Central bank meetings this week.”
  — Ira Jersey, on the Fed event ([22:46])

• “They’re going to be much more cautious now in their easing campaign. And if they ease, what would cause them to ease? At this point, it has to be the job market.”
  — Ira Jersey ([25:14])

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Memorable Moments & Notable Quotes

• On Micron’s Cycle:
  “What’s going on with Micron is more so focused on where the cycle is at.” — Jake Silverman ([02:32])

• On Cost Pressures in Restaurants:
  “Stagflation is not a good situation for restaurant consumers. We saw that in the stocks performances last year.” — Michael Halen ([10:22])

• On FedEx Restructuring:
  “They’re hoping they’ll come out of this transformation a more nimble parcel provider that can really take advantage of some of the strong B2B markets.” — Lee Klaskow ([16:24])

• On U.S. Rate Policy:
  “They’re going to be much, much more cautious now in their easing campaign... At this point, it has to be the job market.” — Ira Jersey ([25:14])

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Key Timestamps

• [02:04] Micron earnings analysis & context
• [03:43] Memory chip pricing outlook
• [04:50] Competitive landscape for Micron
• [06:35] Extended customer agreements at Micron
• [09:03] Darden Restaurants earnings analysis
• [10:22] Commodity, inflation & pricing pressures in restaurants
• [12:08] Restaurant labor market update
• [15:50] FedEx global business trends & earnings preview
• [16:24] Middle East impact on logistics
• [22:13] Fed meeting impact; interest rate policy analysis

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Summary

This episode provides a data-rich, nuanced look into company and sector trends via expert guest analysis. The conversation around Micron underscores the tension between capital intensity and demand, with the AI-driven cycle continuing to stretch the supply-demand dynamic for memory chips. Jake Silverman’s insights help demystify what truly matters to investors: sustained margins, supply limits, and the implications of longer-term customer contracts.
Beyond Micron, listeners get fast-moving updates on restaurant inflation, logistics chain transformation, and evolving central bank strategies—making the episode a valuable listen for anyone tracking the current pulse of Wall Street and global markets.

Transcript

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[Bloomberg Host or Interviewer]

One of the stocks we've been talking about today. Micron Technology sales numbers really impressive. I think some folks are concerned about some of the spending that Micron was talking about on their earnings conference call, so let's get right to it. The stock is down 3% today, but it is just been a really strong performer over the last periods. Let's check in with somebody who does this stuff for a living. Jake Silverman, Bloomberg Intelligence Semiconductor Analyst Jake, what was your takeaway from Micron's earnings?

[Jake Silverman]

Yeah, thanks. I would say that I actually think it's not really the spending that is concerning investors. I think really what's going on with Micron is more so focused on where the cycle is at. We've seen now a couple of quarters of very aggressive price increases for the May quarter, May ended quarter, we're going to see continued very strong double digit pricing growth. And so what I really think is on the top of investors minds is when does this cycle end? How sustainable are these margins? Because if I think about capex, just because capex is increasing, they need to increase capex in order to meet the high levels of demand. Because there's still a very strong supply and demand imbalance that we're seeing. AIR is really the major driver for that. It's the major tailwind and if they're unable to match spending then they're not going to be able to meet the demand of their customers.

[Bloomberg Host]

Has the company shed any light on how high they think memory chip prices will go or at least stay? Because this has huge repercussions for manufacturers of laptops and everything else that needs memory chips because all the memory chip makers are too busy putting together high bandwidth memory chips.

[Jake Silverman]

Yeah, they don't really give a lot of details in terms of what their view on pricing is. Ultimately our take is more so that we're probably going to see the peak of the pricing increases on a quarter to quarter basis. That doesn't mean that pricing won't continue to increase at a somewhat more modest rate. But going back to actually what I was talking about earlier with capital spending, the ability to actually increase supply is going to be a really important factor here both in terms of actually how pricing moves around higher or lower, but because there's actually a constraint and the ability to put up additional clean room space, new fab space, there's not going to be a lot of additional supply in the next 12 to 15 months or until the next 12 to 15 months. So as a result we think pricing still has a few more legs to go. Again it's really just more so that we think pricing on a sequential basis, on a monthly basis, quarterly basis will be a lot more modest in terms of the increases than what we've seen before.

[Bloomberg Host or Interviewer]

Jake, who does Micron really compete against day to day today and then in a couple of years going forward. Is it the Nvidias of the world who do they really compete against?

[Jake Silverman]

Nvidia is one of their biggest customers, but I think it was their biggest customer last quarter and a lot of that is for as you mentioned, high bandwidth memory. Really their competition is Samsung, it's SK Hynix and then some extent Sandisk Although DRAM is coming, an increasingly large portion of their business of sandisk really only competes with about 20% of their business.

[Bloomberg Host]

So in that regard Micron has a lot of pricing power. What advantages does Micron offer over a Samsung or SK Hynix?

[Jake Silverman]

Well, I'd say that advantages are tough because they build to spec for the Jet standard Micron. They do also build to Nvidia specs for high bandwidth memory. One of the things though to keep in mind is that the memory market, as I was talking about the cycle before, it's very cyclical. So really the key here is how much cost can they, what's the better cost profile that they can drive relative to their competition while also maintaining that R and D spend to keep up with the increasing demand of their customers, Nvidia being one of them, but also a lot of other hyperscalers who need high bandwidth memory HBM3e but now we're moving to HBM4 so those standards keep going up. So their ability to compete on cost, their ability to compete on things like pin speed that help with bandwidth, their ability to compete with lower power consumption for their products, those are really the keys. But again it is somewhat commodity like market for the products that aren't high bandwidth memory. So it really is competing on costs and the economics of their business.

[Bloomberg Host or Interviewer]

Hey Jake, about 30 seconds left here. I'm just looking at your research note. Customer agreements are now extending out up to five years in some cases. That seems really long. Talk to us about that.

[Jake Silverman]

Yeah, very unprecedented. The company hasn't given us a lot of details. There's not really a lot to say unfortunately right now. But it does seem like these agreements are different than the LTA's we saw just a few years ago during the last downturn or upcycle that ended up in the downturn as things tend to go with Micron. So really what I would say is that this may be something that could reduce some of the cyclicality going forward. We don't expect all agreements to go out five years. Some might go one year, two year, three years. It's going to vary a lot by the customers, the volume, what the products they're acquiring are.

[Bloomberg Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Bloomberg Host or Interviewer]

We still got a lot of companies reporting here. Now we're starting to hear from a lot of the restaurant companies. Darden's coming up here, so we want to check in with Michael Halen. Michael Halen, he covers all the restaurant companies for Bloomberg Intelligence. He's based down there in Princeton, one of the big ones. Darden, I think, is about to report here. Mr. Halen, what's, what are you looking for there, Mike?

[Michael Halen]

Yeah, Darden reported this morning it was, it was a strong quarter on the top line. So despite all of the cold weather and snow they had mentioned, you know, 40% of their stores had been closed at some point during the quarter. Despite all that, they still were able to put up 4%. Same store sales comp. The problem with, with the report was that they missed on the bottom line. So despite all of, you know, the traffic they were able to drive into their stores, you know, they didn't really see the operational leverage from it. Right. Beef prices were a big headwind, obviously, in the quarter for Longhorn, which is, which is their second largest chain.

[Bloomberg Host]

So how, how is the company planning to tackle that? Because I'm not sure that beef prices are going to come down anytime soon. This is going to be a persistent cost headwind for them.

[Michael Halen]

Well, you know, the entire commodity complex is starting to become a real concern for these restaurant chains and that's why we've seen them kind of reverse their strong gains of the previous three months. But yeah, so what they're going to do is raise prices and they feel that they can because they have not raised prices much over the, you know, post pandemic period. Right. So they've underpriced competitors, they've understood priced, you know, food away from home, inflation. Right. So they think they have some room. But you know, if we continue to see, you know, elevated gasoline prices, if we see a prolonged conflict in the Middle east, you know, it's really going to weigh on restaurant spending. So, you know, we think they're going to have to be careful raising prices. But it's a, it's an interesting time right now. There's a lot of crosswinds. Right. Like, you know, they are seeing people spend more when they get their refund checks. Refund checks are 10 to 11% higher. Right. But unfortunately the spike in gasoline prices up 30% plus now in just a few weeks is going to eat into some of that spending, you know, excuse the pun, you know, and then just overall inflation is going to cause prices to go higher, which is not a good situation for, you know, stagflation is not a good situation for restaurant consumers. We saw that in the stocks performances last year. Right. When people's budgets get pinched, they spend less at restaurants. Margins get squeezed for the restaurants. It's just a tough climate to operate in.

[Bloomberg Host or Interviewer]

Mike, what are your companies telling you about labor? Labor availability, sustainability. How's the labor side of the equation? Because that's a big part of their cost structure as well.

[Michael Halen]

Yeah, labor's been okay. There's a lot of the companies we cover are seeing a lot less turnover. Wage inflation has been, you know, it looks like about 3% for some of the companies that have reported recently versus, you know, this 4% to 5% range that we've seen since about 2020. So the labor piece of the equation has definitely improved a bit for the companies in our sector.

[Bloomberg Host]

What will you be listening for from the other restaurants that report? Are we going to see similar themes play out for them?

[Michael Halen]

Yeah. So Darden's is a little bit, Darden's a little bit off cycle. So they're the first ones report,

[Bloomberg Host or Interviewer]

you

[Michael Halen]

know, almost into this ne next cycle. Right. So because their quarter ended month late February. Right. So they we have, they're giving us an early read. So when our other names report right. We've gotten a feel for what the first quarter was and what we think it will be is like stronger. Pretty strong considering all of the winter winter weather considering the snow still putting up, pretty solid. Same store sales, you know, over 4% here for Darden. You know, a month ago the question was, you know, really about the top line and how, you know, and how much better things were looking and how much people were going to be spending in their restaurants, how much of those tax refund checks were going to get spent at restaurants. But now I think the questions are going to shift more to the margin side. Right. Like this. Higher gasoline prices mean commodities are higher for longer. Right.

[Bloomberg Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

[IBM Representative]

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[Bloomberg Host]

All right, let's stay with this global theme because FedEx reported results and clearly it's not just a barometer for the US Economy, but really for the global economy at large. Lee Klaskow is our senior transport logistics and shipping analyst and he is joining us to give us a preview of what FedEx is likely to say. So FedEx, Lee, when it comes to FedEx, they have their own issues, right. They've been trying to turn things around, overhaul the business. How much of the results reflect that effort versus what's happening globally?

[Lee Klaskow]

Yeah, I mean, we all have our own issues, but FedEx certainly does have a number of them. And you know, they've been busy trying to restructure their European business and you know, they're kind of combining their ground and express networks and they're kind of going through a transformation right now and they're really hoping that they'll come out of this transformation a more nimble parcel provider that can really take advantage of some of the strong B2B markets that they're going after and higher margin B2C business also as well. You know, volume looks like it's probably going to grow during the earnings. We're not really expecting that much new news because they just had an investor day the other month. But we do expect to get a lot more color about what's going on in the Middle east and how that's going to impact FedEx and its in its business going forward. So that's what, you know, I'm most interested to hear about. You know, the company, like I said, does have a large European operation. You know, the Middle east has become a huge hub for freight between Europe and Asia and that has been dislocated. And so they're obviously dealing with higher costs associated with some of that business. There's lost volumes that will be involved because the area is not safe to fly into. So we expect to get an update on, on how the, you know, the conflict in the Middle east will unfold for carriers like a FedEx.

[Bloomberg Host or Interviewer]

So what's FedEx saying today about just the their business in general in terms of volumes and things like that? I mean, because it's such a bellwether for many parts of the economy, as you well know. What are they saying? Just about core fundamental business trends? Yeah.

[Lee Klaskow]

So, you know, FedEx has two main businesses. The business that we all probably know when you get something at your doorstep, you know, letters going to lawyers offices. And they also have a less than truckload business. They're the largest ltl carrier in the United States. They're actually planning to spin that business.

[Bloomberg Host or Interviewer]

I would say spin that out if I were.

[Lee Klaskow]

They are, they are spinning that out. Where they're doing an analyst day next month. We're excited to attend that and find out more. But you know, that business has been suffering significantly because of the weak industrial economy. I don't need to tell you the ESM has been in contraction territory a lot more than an expansion territory over the last two and a half years. And that's really weighing on that business. But you know, looking pivoting towards, you know, there are larger business, their parcel business, that business has been okay, it's growing. Volumes are growing by low to mid single digits. They're getting pricing in low to mid single digits. The problem that they're facing right now is costs. And they're trying to, you know, kind of, if you will, reduce their overall cost curve to help, you know, drive better margins going forward. And some of the things that, you know, I kind of alluded to earlier, you know, whether it's restructuring their air network, whether it's combining their ground and air network, these things will benefit the company, A, in a better demand environment globally and B, it's going to take time for those benefits to come down to the bottom line.

[Bloomberg Host]

So, Lee, we have FedEx reporting and then UPS will report probably in about another five weeks or so how much of what FedEx tells us, especially when it relates to to global trends, can be applied to ups.

[Lee Klaskow]

I think a lot. You know, they're both very, very similar. They're both going after similar growth businesses. They both want to get more into health care logistics, which is tends to be more profitable. They obviously have their finger on the pulse of the consumer. UPS is tied to a little more to companies like Amazon. You know, they are trying to wind down that business, but you know, they're more tied to it. There are some differences, but I think there's more similarities than there are differences about, you know, what it's going to tell us about the overall economy.

[Bloomberg Host or Interviewer]

Stay with us. More from Bloomberg Intelligence coming up after this.

[IBM Representative]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.

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[Bloomberg Host]

We had a Fed day yesterday.

[Jake Silverman]

We did, Yeah.

[Bloomberg Host or Interviewer]

I mean, in all the news flow, it kind of gets drowned out a little bit.

[Bloomberg Host]

Yeah. And you know, coming into this, I was just talking with Michael McKee. He was saying that for the most part, he didn't think it would be anything big. You know, a couple of weeks ago, certainly we didn't think it'd be anything big, but some news was made. Certainly Jay Powell making clear that he is in no rush or the committee is in no rush to cut interest rates. Ira Jersey is our Bloomberg Intelligence Chief U.S. interest Rate Strategist. He talks to us about the Fed, about the economy, about rates and where they're headed. What surprised you the most from yesterday's news conference?

[Ira Jersey]

That it was probably the least important of the 17 Central bank meetings this week.

[Lee Klaskow]

That's right.

[Ira Jersey]

You know, the bank of England meeting, obviously is what's really roiled the rates market today. Yeah. So I don't know if it was surprising, but. But I think the clarity that, you know, Jay Powell said that he intends on staying on until Kevin Marsh is confirmed by the Senate. I think that that was something that most people we had speculated about. But the fact that he confirmed that I think is important. Will that have an effect on President Trump and what's his reaction going to be to that? I think is an open question and clearly there's going to be a lot of debate about it. And then the other is his comment which really is what to set the markets off saying that basically oil was going to determine whether or not they cut interest rates again. Right. If oil prices continue to go higher, that they probably wouldn't, wouldn't cut again. And that's, that's where you saw the bear steepening the yield curve. So two year yields going up much faster than longer maturity debt.

[Bloomberg Host or Interviewer]

You mentioned the bank of England. Is the call there, Ira, that they held rates the same but they said, hey, we'll raise them if inflation gets warrants.

[Ira Jersey]

Well, they basically implied 50 basis points of interest rate hikes which you know, the market was pricing in for some chance of an interest rate hike over the next 12 months or so. But to really set the market off. That's why, you know, currently the two year, two year gilt, so two year GBP bonds are, are higher by about 30 basis points, like 29 basis points. I think at the moment they were a little bit higher earlier today. And that's really, is what's roiled the entire US market. When I came in and I sat down in my terminal this morning, two year yields were off. US two year yields were off 17 basis points. You know, now we're only off, you know, four. And this happens pretty regularly. Right. Where you'll see that effectively the tail wagging the dog. Right. Obviously U.S. treasuries are the global benchmark for interest rates. That's still the case. But when you have something that happens in Japan or something that happens in the uk, that really sets off the developed market interest rate complex that filters into U.S. treasuries overnight because people just sell risk and so whatever is liquid and they can sell. But then once you get into US trading hours then you know, I don't want to say cooler heads but, but kind of more rational heads prevail at that point.

[Bloomberg Host]

So how are you rethinking everything now given what Powell said, given what we heard from the body, the ECB this morning as well.

[Ira Jersey]

Yeah, you know, we had thought that the Fed would probably cut interest rates to just below 3%. Just the way that we were thinking about it was, you know, real yield yields. The Fed thinks that the real funds rate should be about 100 basis points plus or minus a little bit. So if inflation is going to be two, two and a quarter, which is what we were implying for the PC deflator for year end that they would be able to cut interest rates down to 3%, more or less. Well, guess what, the inflation situation is far different now than it was before. I don't think they're going to hike because they don't want to necessarily be the impetus for a major recession, but I think that they're going to be be much, much more cautious now in their, in their easing campaign. And if they ease, what would cause them to ease? At this point, it has to be the job market, right? You have to see like negative 100,000 job prints for two or three months. That would certainly scare them and make them probably rethink about a cut again. But when inflation expectations are rising as dramatically as they have the last three weeks, that's going to let them, you know, take their foot off the gas just a little bit.

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