Musk Says Micron Is Being Fair on Memory Prices. He Called Its Rivals “Extortionate”
Elon Musk just called unnamed memory makers extortionate while praising Micron's pricing as a model for long-term loyalty, but the company's own contracts tell a more complicated story about who actually controls prices.
At 5:52 p.m. Eastern on October 13, 2026, Elon Musk, responding to Nicholas Mugalli, posted on X that Micron Technology (NASDAQ:MU | MU Price Prediction) “has been reasonable regarding future memory prices, while others have been extortionate, which is something today’s customers won’t forget …” He named no company. No company was labeled extortionate. He added that Micron was making the smart move for long-term customer loyalty.
@RealNickMugalli Micron has been reasonable regarding future memory prices, while others have been extortionate, which is something today’s customers won’t forget …
Micron is making is the smart move for long-term customer loyalty.
— Elon Musk (@elonmusk) October 13, 2026
Micron had closed the regular session at $953.19, down 3.62%, and after hours it rose only 0.32% to $956.20. The praise read as commentary, and that take looks right.
What Musk’s Post Actually Covers
Nothing in the post is signed. No supply agreement between Micron and any Musk company has been reported, and the post disclosed no prices, volumes, or contract terms.
Musk was responding to investor Nicholas Mugalli. His post summing up a JPMorgan Chase (NYSE:JPM) note said Micron holds 26 long-term deals covering 35%+ of revenue through 2030, $150 billion in contracted backlog, $32 billion in committed customer cash and over 75% of next year’s output already sold. Those figures came through a social post. They didn’t come from the note itself, but they line up with what Micron told investors on its September 30 earnings call.
Why the Contracts Matter More Than the Compliment
Selling output years ahead turns a cyclical commodity business into something closer to a contracted one. That shift explains much of the re-rating that raised Micron’s market value to $1.08 trillion, close to Berkshire Hathaway’s (NYSE:BRK-A, NYSE:BRK-B) $1.11 trillion.
Against guidance for fiscal first-quarter revenue of $61.5 billion ± $1.5 billion, one buyer’s goodwill doesn’t move the numbers. Musk also has a stake in the matter. His companies buy huge amounts of memory for AI computing and vehicles (we featured seven suppliers behind that same AI expansion, from power to cooling, in a free report you can grab here). When a buyer that size praises a supplier for gentle pricing, he is also negotiating in public.
Where the “Reasonable” Label Breaks Down
Micron posted an 87.0% non-GAAP gross margin (the share of revenue left after production costs) in the fiscal fourth quarter. Management said, “any new discussions on SCAs where pricing is involved are negotiated with higher pricing based on prevailing market conditions and outlook.”
The pricing bands limit both the downside and the upside. Three quarters of the expected contract revenue come with a set pricing framework, and most of those frameworks carry floor and ceiling prices. Ceilings cap the upside during a shortage, but the finance chief said: “even at floor prices, we expect margins meaningfully above any prior cycle peak margins.”
The bigger threat is supply, because before Musk posted, a Chinese memory maker flagged a denser chip design, which goes straight at the scarcity thesis for commodity DRAM. Micron fell 12.4% over four sessions from $1,088.00, and it now trades 24% below its $1,255.00 high even after a 234.18% gain this year.
What Investors Need to Weigh in Micron’s Contract Story
The pullback likely reflects worry about future Chinese supply, while Micron’s contracts are cash-backed take-or-pay agreements (the customer pays whether or not it takes delivery) that run into 2031. Musk’s post doesn’t change any contract already signed, and investors were right to shrug, since the pricing control he praised is narrower than it sounds because Micron is raising prices on new agreements.
Memory cycles can turn fast, and output sold forward at today’s prices may look cheap if the shortage gets worse while Chinese competition grows. Micron’s fiscal first-quarter report needs to land inside its $61.5 billion ± $1.5 billion range at roughly 86.25% gross margin. A miss on either number, or a close back below the $186.25 low that started this run, would prove this view wrong.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
