The pre-market session on Thursday was a wall of green. Micron Technology (NASDAQ:MU | MU Price Prediction) ripped 12.32% intraday to $1,177.73 after a fiscal Q3 report that redefined what an AI-cycle blowout looks like. The rest of the memory complex came along for the ride. On CNBC the same morning, Global X’s Seana Smith framed the earnings report as vindication, saying “the beat and raise… very much justifies… the demand side of the story… with the AI infrastructure build out.” The interesting trade was buried in what came next.
Moreover, Academy Securities strategist Peter Tchir pivoted. “This solves some of the problems that came up earlier in the week,” he said, before adding that “there’s going to be better opportunities. The market’s got to start focusing on what the president’s next agenda is. Defense spending, space spending.” That is the trade hiding inside the chip rally.
The Micron number that anchors the debate
Micron posted fiscal Q3 revenue of $41.46 billion against a $35.25 billion consensus. In addition, non-GAAP EPS came in at $25.11, and a GAAP gross margin at 84.6%. Cloud Memory alone did $13.77 billion. CEO Sanjay Mehrotra called it “the strategic value of memory in the AI era” in the 8-K press release. Furthermore, he then guided Q4 to $50 billion in revenue and 86% gross margin.
Steve Grasso raised the obvious complication. “You don’t really buy this stock at 80% margin… that’s why you see the stock fall 20% and then rise 15%. I would say we’re probably closer to the end in those.” The shares are up 267.54% year to date and 721.72% over a year. Qualcomm (NASDAQ:QCOM) rode the same wave higher, up 3.69% on the day, but its handset revenue fell 13% year over year in the prior quarter on memory supply constraints. The AI memory bull case is now priced.
The defense pivot
Look at where the money would actually go. The Department of War’s FY 2027 budget request totals $756.8 billion in investment spending, an explicit 42% increase with $18 billion earmarked to operationalize Golden Dome and the largest space allocation in U.S. history. Patriot, THAAD, and SM-3/SM-6 inventories are being topped up.
Lockheed Martin (NYSE:LMT) has been the laggard, up only 2.85% year to date after a Q1 EPS miss at $6.44. Management reaffirmed $77.5 to $80.0 billion in FY26 sales and flagged multi-year framework agreements scaling Patriot, THAAD, and PrSM production three to four times current rates. The stock trades at a forward PE of 16x, against an analyst target of $625.16.
BWX Technologies (NYSE:BWXT) is the cleaner play on naval reactors and reshored nuclear manufacturing. Q1 revenue rose 26.1% to $860.22 million, backlog sits at $8.65 billion, and FY26 guidance was raised above $3.75 billion. Shares are up 19.31% year to date with a forward PE of 46x.
Space and rare earths
Rocket Lab (NASDAQ:RKLB) was selected for the Space Based Interceptor under Golden Dome, posted Q1 revenue of $200.35 million up 63.5%, and carries a $2.2 billion backlog. The shares pulled back 20.90% over the past week as investors took profits from a 155.26% one-year run. MP Materials is the rare-earth complement, with NdPr oxide and metal sales up 192% and a long-term magnet supply deal with Apple. Both names slot directly into the reshoring line item Tchir keeps circling.
The rates wildcard
Grasso argued rate cuts are coming. “I think the rate hike story is over. It’s done… It’s at 1.85% right now. So I think he’s going to be smart and create an argument by the end of the summer to be able to cut rates again,” he said. Kalshi’s January 2027 contracts price a 61% probability of fed funds staying above 3.25%, so the panel sits well ahead of the prediction-market crowd on dovishness. If correct, defense capex and space programs get cheaper to finance just as the budget cycle delivers demand.
If wrong, the Micron rally still has to defend an 86% gross margin guide. Either way, the more interesting position has moved off the memory chart.
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