Micron Surges Higher | AI Inflation Grows | Qualcomm Expands | SEC Probes

Micron (MU) crushed earnings and reignited enthusiasm across semiconductors. The company beat expectations and projected memory shortages could extend beyond 2027. Shares surged nearly 18% premarket.

Nasdaq futures are up over 2% and the rally spread quickly. Oil provided another tailwind. WTI continues its return to pre-war levels as it trades around the $70 level. 

Investor Signal

Micron answered the market's biggest question: AI demand remains strong.

The focus has shifted from AI skepticism back to AI capacity and growth. Inflation data is next, but semiconductor names are leading the market again.

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Micron (MU) reported after the close yesterday. Revenue quadrupled year-over-year. Gross margins hit 84.9 percent. Next quarter guidance came in way above expectations too. Q3 revenue guidance of $49B-$51B crushed expectations of roughly $43.6B. Shares surged roughly 18 percent premarket.  Nasdaq futures immediately rallied.

For context, Micron was down 13 percent just two days ago. The AI hardware selloff looked like a verdict. Wednesday night reversed it entirely.

Here's the part that really stands out. Micron has signed 16 long-term supply agreements with major customers. Half the company's revenue will soon be locked in through three-to-five year contracts. That's not a commodity business anymore. That's a recurring revenue business with memory chips attached.

The CEO said supply shortages extend well beyond 2027. Customers already know this and they're signing now to guarantee supply.

What the Numbers Confirm

The Re-Rating Signal

If Sandisk (SNDK) and Western Digital (WDC) confirm similar supply tightness in their next earnings, memory officially reprices from cyclical commodity to secular growth category. That's a very different multiple.

The WSJ published a framing that changes how you read every Fed decision going forward. The AI buildout is the third wave of post-pandemic inflation. Not a theory. An institutionally documented economic pattern.

Hyperscaler capital spending hits $741 billion this year alone. One economist projects $8 trillion in total AI buildout spending through 2032. Goldman Sachs forecasts consumer electricity prices rising 6 percent annually from data center demand alone. And 81 percent of professional economists say the buildout adds to inflation over the next year.

Here's the irony. Warsh wrote last November that AI would be "a significant disinflationary force." That framing is now being directly contradicted by 81 percent of his professional peers.

Computer software prices are up 15 percent year-over-year. Wholesale electronic components up 27 percent. Electrician wages growing nearly double the rate of all other workers.

What This Changes for the Rate Path

The Thursday Number

PCE above 4.1 percent Thursday morning puts July on the table seriously. Below 4.1 percent buys Warsh one more month of patience before the committee forces his hand.

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Qualcomm (QCOM) shares jumped 15 percent after hours. The company doubled its 2029 non-handset revenue target to $40 billion. Data center sales are now projected at $15 billion by 2029. A year ago this wasn't a real business for them.

Meta (META) will use Qualcomm's new Dragonfly C1000 data center CPU starting in 2028. That's the first major hyperscaler committing to Qualcomm for data center compute. It validates the entire pivot.

The CEO's reasoning is sharp. Qualcomm already has relationships with nearly every hyperscaler through smartphone chips. The trust was already there. The data center CPU is the next logical product.

The timing connects directly to OpenAI's Jalapeño announcement yesterday. AI labs are moving away from pure GPU dependence. CPUs handle agentic AI workloads more efficiently. Multiple chip vendors are now needed. Qualcomm is raising its hand at exactly the right moment.

The Hyperscaler Test

Qualcomm paid $3.9 billion for Modular, a software company designed to run AI applications across different chip architectures. That's Qualcomm's answer to Nvidia's CUDA developer ecosystem. Software lock-in is the real competition now.

The Fed released annual bank stress test results. All 32 banks passed. Every single one. The sector could absorb $708 billion in projected losses without breaching minimum capital requirements. Banks are in the best shape they've been in years.

The capital return announcements followed immediately. JPMorgan (JPM) announced a $50 billion share buyback starting July 1 and raised its dividend 10 percent. Goldman Sachs (GS), Wells Fargo (WFC), and Morgan Stanley (MS) all raised dividends too. Morgan Stanley added a $20 billion buyback program.

JPMorgan CEO Jamie Dimon also mentioned he's looking at acquisitions up to $20 billion. Banks with this much capital surplus don't stay quiet for long.

What the Surplus Signals

The Basel Wildcard

If Basel III Endgame requires significantly more capital retention, the buyback party ends fast. That proposal is the single biggest near-term risk to the current capital return wave.

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Private equity firms have a problem. They're sitting on over 30,000 companies they need to sell but can't at acceptable prices. Their solution has been continuation vehicles. Sell assets from one fund you control into another fund you also control.

The SEC's enforcement division is now investigating exactly that.

The probe focuses on three things. Conflicts of interest, because managers sit on both sides of the transaction. Valuation methodology, because the prices aren't set by a market. And whether investors are being told enough about what's actually happening.

This market grew to $106 billion last year. It's no longer a niche product. It's the primary liquidity mechanism for a large portion of private equity.

Why This Lands Now

The Enforcement Clock

A first major SEC enforcement action against a continuation vehicle in the next 90 days converts this from scrutiny into binding regulatory risk. That changes the private credit financing available for AI infrastructure deals downstream.

Thursday opens with Micron having decisively revived confidence in the AI hardware trade.

Revenue quadrupled. Margins hit record levels. Guidance blew past expectations. The doubters had one bad evening. Qualcomm doubled its data center revenue target. Banks passed stress tests and immediately returned capital. The SEC opened formal private equity investigations. And PCE prints this morning into all of it.

The AI buildout is officially the third inflation wave. The Fed's inbox just got very full.