June was another intense month for the news flow in the technology sector \u2013 the latest quarterly reports were presented, new models were launched and new computing capacity agreements (compute agreements) were concluded.
The most positive event for us from a portfolio perspective in June was Micron's quarterly report. First, the company forecast a gross margin of 86% for the next quarter \u2013 a near-extraordinary result and a level that would have been unthinkable in the memory industry historically. Second, Micron now has a very high degree of predictability in its business, as an increasing proportion of its business will be covered by fixed-price agreements.
It is a remarkable level of transparency and predictability that we are now seeing across the industry \u2013 both in terms of prices and volumes. For Micron, which trades at a P\/E ratio of 8, the market is still clearly concerned about the risk of downside cyclicality. However, these long-term agreements (LTAs) help to mitigate that risk. Combined with continued upward revisions to earnings forecasts, we also see potential for further repricing of the stock, as the LTAs should significantly reduce the negative impact of cyclical fluctuations.
It is also important to note that customers signing these LTAs are committing to pay significantly higher memory prices than they have historically, and this for a long period of time. This signals very clearly that they themselves assess that the current situation, where demand exceeds supply, will persist for a significantly longer period of time.
The portfolio rose by 3.3 % in June and is up 11.6 % so far this year, measured in Swedish kronor (SEK).<\/p>\n\n\n\n