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Micron dips on report Samsung is taking the early lead in HBM4 supply

Shares of Micron are starting the week lower after Reuters reported that Samsung is poised to begin production of HBM4 chips — the new standard for high-bandwidth memory — next month, with the output heading to Nvidia.

South Korea’s SK Hynix fell 3% in local markets, while Samsung finished only marginally higher.

Pretty much all news about memory chips, from reported price hikes to production increases, has been treated as universally positive for all members of the triumvirate. This is the first time in recent memory we’ve seen some more idiosyncratic treatment of these names.

Perhaps this is just a bit of a cooling-off period after Micron’s 40% year-to-date gains through Friday. By all accounts, high-bandwidth memory is in tight supply, so there’ll be eager buyers for all the supply these companies are able to bring to market.

Following Micron’s blockbuster earnings report, Executive Vice President of Global Operations Manish Bhatia said that he anticipates starting to ship HBM4 chips in the second quarter.

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GameStop surges after Michael Burry reveals he owns the stock

Shares of GameStop are surging after Michael Burry, former hedge fund manager of “The Big Short” fame and current Substacker, announced that he’s been buying the video game and collectibles retailer recently.

The revelation came in Burry’s long-anticipated follow-up post on GameStop. The stock initially jumped when Burry tweeted about his history of being long the stock in November, and again in December as he teased a more thorough write-up of the experience.

Per CNBC, Burry wrote in a Substack post on Monday:

I own GME. I have been buying recently. I expect I am buying at what may soon be 1x tangible book value / 1x net asset value. And getting a young Ryan Cohen investing and deploying the company’s capital and cash flows. Perhaps for the next 50 years.

GameStop is a stock that has traded off of nostalgia, its exposure to things that are cool or entertaining, and leaders with Big Main Character Energy. And Burry’s the first injection of Main Character Energy into the shares since Keith Gill, aka Roaring Kitty, came back to spur another meme-stock rally in GameStop in the second quarter of 2024 and then disappeared almost as quickly as he’d arrived.

Gill and Burry have a lot in common: Both like GameStop because they think it’s cheap and they’re willing to make “a bet on the management, in particular, of course, Ryan fucking Cohen.”

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Extreme optimism on global growth is a bad omen for cyclically sensitive trades

By mid-December, it became pretty clear that investors were pricing in an acceleration in global growth for 2026, and price action since then has only calcified that narrative.

“The equity market has rapidly priced a positive expected growth outlook for this year,” Goldman Sachs’ Cullen Morgan wrote. “Similar has been seen in other asset classes as well, leading to our Global Growth Optimism Factor (RAI PC1) hitting a level seen only a handful of times over the last two decades.”

RAI stands for “risk appetite indicator,” the bank’s proprietary metric for investor sentiment.

One problem with all this optimism embedded in asset prices, Morgan noted, is that it can serve as a high-water mark for trades perceived to be sensitive to the ebbs and flows of the economy — in particular, small-caps and cyclicals versus defensives.

Goldman Growth Optimism — Source: Goldman Sachs

“To be clear, we continue to recommend select cyclicals as beneficiaries of the economic acceleration in early 2026 given the market does not yet appear to be fully pricing our economists’ above-consensus growth forecasts, but we are growing wary of a limited runway,” he concluded.

Investors are pricing in a global growth revival for 2026

Investors are pricing in a global growth revival for 2026

RAI stands for “risk appetite indicator,” the bank’s proprietary metric for investor sentiment.

One problem with all this optimism embedded in asset prices, Morgan noted, is that it can serve as a high-water mark for trades perceived to be sensitive to the ebbs and flows of the economy — in particular, small-caps and cyclicals versus defensives.

Goldman Growth Optimism — Source: Goldman Sachs

“To be clear, we continue to recommend select cyclicals as beneficiaries of the economic acceleration in early 2026 given the market does not yet appear to be fully pricing our economists’ above-consensus growth forecasts, but we are growing wary of a limited runway,” he concluded.

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Goldman Sachs: Megacap tech stocks’ relative valuations are near their 2022 lows

With Microsoft and Meta jump-starting the megacap tech reporting period this Wednesday, Goldman Sachs equity derivatives and flows specialist Cullen Morgan commented on a relative rarity for the cohort of behemoths: they’re not really that expensively priced. He wrote:

“Valuations of the mega-cap tech stocks have declined substantially in recent months. The group now trades at a forward P/E of 27x, which ranks in the 59th percentile relative to the past decade. Relative to the rest of the S&P 500, the 31% P/E premium ranks in the 24th percentile during the past 10 years...

While elevated FCF multiples leave room for further de-rating, the current PEG ratio of 1.4x nearly matches the trough from late 2022.”

Goldman Mega Cap Tech Valuations

This is exactly why we suggested keeping an eye on hyperscaler valuations coming into this year, particularly this divergence between price-to-earnings ratios and price-to-free cash flow ratios, as a way to monitor whether profit expectations surrounding the transformative potential of AI were getting extrapolative or not:

“One way to square this circle between elevated, not crazy forward valuations based on one metric and sky-high ones based on another is to conclude that the lack of runaway forward price-to-earnings ratios suggests that the market does continue to have some skepticism about the long-term earnings power associated with all these capital outlays.

Less doubt would equal higher valuations and higher stock prices. No doubt and unbridled optimism about how much these first movers in AI will reap rewards for years if not decades to come… that’s how we really get a bubble.”

So far in 2026, the market has been squarely focused on rewarding companies that are poised to benefit from near-term shortages and excess profit opportunities brought about by the AI boom, rather than its potential long-term winners. We’ll see if that changes as megacap tech leaders start to step up to the plate this week.

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Matt Phillips1h

Booz Allen Hamilton dives after Treasury Department cancels contracts over leak

Large defense-centric government consulting firm Booz Allen Hamilton dove Monday after the US Treasury Department announced it was canceling all its contracts with the firm, citing a former employee who pleaded guilty to leaking tax information about President Donald Trump and thousands of the country’s richest people to media outlets like The New York Times and Propublica between 2018 and 2020.

The man, Charles Edward Littlejohn, was sentenced to five years in prison in January 2024.

The US government accounts for nearly all revenues generated by Booz Allen, with more than 70% coming from defense and intelligence clients as of its most recent earnings report. The remainder comes from civil clients, a division that includes the Treasury.

The Treasury Department said it canceled all 31 contracts it had with the company, which were worth a total of $21 million.

“Booz Allen failed to implement adequate safeguards to protect sensitive data, including the confidential taxpayer information it had access to through its contracts with the Internal Revenue Service,” Treasury Secretary Scott Bessent said in a statement.

Just last week, management had raised its annual profit outlook after reporting better-than-expected third-quarter earnings.

Treasury Cancels Contracts with Booz Allen Hamilton

Treasury Cancels Contracts with Booz Allen Hamilton

The man, Charles Edward Littlejohn, was sentenced to five years in prison in January 2024.

The US government accounts for nearly all revenues generated by Booz Allen, with more than 70% coming from defense and intelligence clients as of its most recent earnings report. The remainder comes from civil clients, a division that includes the Treasury.

The Treasury Department said it canceled all 31 contracts it had with the company, which were worth a total of $21 million.

“Booz Allen failed to implement adequate safeguards to protect sensitive data, including the confidential taxpayer information it had access to through its contracts with the Internal Revenue Service,” Treasury Secretary Scott Bessent said in a statement.

Just last week, management had raised its annual profit outlook after reporting better-than-expected third-quarter earnings.

markets

Matt Phillips2h

Morgan Stanley jacks up its Sandisk price target

Sandisk climbed early Monday after a hefty target price hike from analysts at Morgan Stanley.

Morgan Stanley semiconductor analysts upped their price target from the significantly under market level $273 (the shares are currently hovering around $473) to $483. Morgan Stanley’s big hike might be the start of a trend, as the velocity of the rally in Sandisk has left Wall Street’s average price target of $394 in the dust. The bank kept its “overweight” rating on the stock, which it first applied in March 2025.

Once primarily known as a stodgy maker of USB thumb drives, Sandisk has seen interest explode over the last year alongside prices for NAND memory chips, which its devices rely on. Sandisk was the best-performing stock in the S&P 500 last year, after it was added to the index in November. The shares are up a remarkable 1,255% over the last 12 months, with most of that gain coming since the beginning of September.

NAND chips have long been considered a relatively cheap and ubiquitous commodity in the world of semiconductors. But prices for NAND chips have surged of late because of voracious demand for AI data centers, especially for “enterprise solid state drives” or eSSDs — bulky data storage devices that use more NAND than other storage products and have gobbled up supply of the chips.

Morgan Stanley analysts wrote:

“NAND fundamentals remain exceptional, driven by the surge in enterprise solid state drives that we highlighted a few months ago (with 2 cloud customers ordering close to 10% of global supply for all of 2025 for 4q delivery); that has meaningfully tightened the consumer markets as well.”

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