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Matter

@MatterGlobal

Generalist Investor, CFA, views are my own

 New York, NY
Joined November 2022
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Photo by Matter (@MatterGlobal)Photo by Matter (@MatterGlobal)
$AMD Lisa Su talks about how Anthropic is likely a multi-generational customer of AMD GPUs beyond MI455X. It’s too much work to get teams integrated and just to adopt for a single generation. Implies the deal is beyond just initial 2 GW.
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Incredible that even ~3-4 year old GPU models ($AMD MI300, $NVDA H100) rental prices are still going up ~30% per $DOCN. Possibly +ve to useful life estimates for GPUs likely beyond ~5 years, reducing D&A expense + boosting margins for hyperscalers. Disproves AI overbuild fears
Image from Matter (@MatterGlobal)
Image from Matter (@MatterGlobal)
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On the flip side, if depreciation schedules remain unchanged, the residual value of GPUs go higher and generate revenues at much higher incremental margins after fully depreciated
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1/7 Memory LTAs may be more important than the market appreciates. The key change: these are not old buyer-friendly LTAs. They increasingly include volume/price commitments, cash deposits or LOCs, and multi-year terms. That could structurally dampen memory cyclicality.
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7/7 Bottom line: LTAs protect the downside. HBM/AI DRAM drives the upside. NAND moving from cold storage toward warmer AI memory/storage tiers adds optionality. The next memory downturn can still happen, but it may not look like the old cycles. $MU $SNDK
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6/7 HBM makes this more interesting. Micron is not just a commodity DRAM/NAND story anymore. HBM4/4E/5 require tighter customer qualification, advanced packaging, custom base dies, power/thermal co-design, and scarce qualified supply. That should support +ve pricing durability
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5/7 The biggest Micron implication is not that downside disappears. It is that trough gross margin and EPS may be structurally higher than prior memory cycles. If true, the old “peak earnings deserve a very low multiple” framework may be too punitive.
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4/7 Also protection improves over time. As customers purchase under the contract, remaining obligations decline. The same deposit/guarantee then covers a larger % of the remaining contract value. So LTAs may be most powerful later in the cycle, when downturn risk is higher.
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3/7 I would give much more credit to cash deposits/LOCs than potential legal damages. Legal recoveries may be possible, but they are slow, uncertain, and relationship-sensitive. The immediate financial commitment is the real first-loss protection investors should underwrite.
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2/7 The breach math is different now. A customer cannot simply compare contract ASP vs spot ASP for DRAM/NAND They must compare contract ASP vs spot ASP + forfeited deposit/LOC + legal/friction costs + future supply access risk. That raises the hurdle to walking away.
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