Investment Review №330. Profit favors the bold

Micron Technology

On September 23, Micron Technology, Inc. (MU) issued exceptional results for Q4 FY 2025 and record-breaking forecasts for Q1 FY 2026, surpassing market expectations. The company achieved unprecedented quarterly and annual revenues fueled by explosive growth in its data center segment. The remarkable performance was primarily driven by record HBM memory shipments and significant margin expansion, attributed to a favorable sales mix, measured pricing policy, and cost optimization. The robust forecast for Q1 FY 2026 mirrors the same trends that were observed in Q4. Management has raised memory market expectations for 2025 and 2026, which reflects increasing demand for AI and a constrained supply of memory chips in the market. The company is in advance of its technology product roadmap, with its HBM memory technical specifications positioning it as an industry leader. Following the report, MU shares saw profit-taking, which subsequently fueled a renewed surge in stock prices.

Expected HBM memory market shares in 2026 & HBM4 specifications

Sources: TrendForce, company data, Freedom Broker

Nike

NIKE, Inc. (NKE) reported an uptick in sales for the first time after five consecutive disappointing quarters. In Q1 FY 2026, revenue increased by a modest 1.1% to $11.72 billion, surpassing a consensus forecast of $10.97 billion. Nonetheless, the market’s response was relatively muted: stock prices briefly surged by about 10% only to quickly retreat to $70. Direct sales, which represent 38% of revenue, dropped by 4% y/y. Additionally, Nike continued to face challenges in its key segment, as footwear sales declined by 1% y/y to $7.4 billion. Wholesale emerged as the primary growth driver, though this was due to a rebound after significant declines in previous periods, as retailers merely replenished their inventories. While Nike’s profitability improved compared to Q4 FY25, it remains in a negative trend. The gross margin stood at 42%, and the operating margin was 8%. Management refrained from issuing official guidance but projected lower sales for the second quarter and revised the forecast for duty-related losses upwards, from $1 billion to $1.5 billion for the current year. Freedom Broker has set a price target of $80 for NKE shares.

Revenue, million $

Sources: FactSet, Freedom Broker estimates 

Pfizer

On September 30, Pfizer (PFE) reached an agreement with the U.S. Government to lower pharmaceutical prices. Under the terms, Pfizer will cap prices for primary care drugs and certain specialty care products, adhering to the Most-Favored Nation (MFN) principle for the Medicaid program. Besides, Pfizer has joined the new government platform, TrumpRx, which offers medications directly to patients at discounts ranging from 50% to 85%. The company has also pledged to invest an additional $70 billion in R&D and capital projects over the coming years. In exchange, Pfizer secured a three-year suspension of import tariffs on pharmaceuticals.

This strategic compromise allows the company to mitigate regulatory risks without substantially harming its business operations. Any potential impact on Pfizer’s revenue may be minor or already accounted for in market projections. Medicaid constitutes no more than 5% of Pfizer’s U.S. revenue, and Eliquis, a major primary care brand, has already been affected by IRA price regulations, starting in 2026. Importantly, the MFN regulation does not extend to the oncology sector, which is critical for Pfizer’s long-term revenue growth.

The market has interpreted this deal as a move to avert the worst-case scenario of sudden tariffs and stringent price controls. Despite this, Pfizer’s market valuation remains below pre-pandemic figures, hovering near 20-year lows. Following Pfizer, other major companies like Eli Lilly (LLY) and Johnson & Johnson (JNJ) may reach similar agreements with the U.S. Government.

Pfizer’s NTM P/E over 20 years  

Source: FactSet

Tesla

Tesla Inc. (TSLA) shipments for Q3 2025: growth was fueled by updated models. On October 2, Tesla Inc. (TSLA) reported its operating results for Q3 2025. During this period, the company delivered 497,100 electric vehicles (+7.3% y/y and +29.4% q/q). These figures surpassed FactSet’s consensus forecast of 456,000 units, due to strong sales of updated models and heightened demand in the U.S. amid the anticipated removal of incentives for purchasing new electric vehicles.

On July 3, President Trump signed the One Big Beautiful Bill Act (OBBB), which eliminated the tax credit of up to $7,500 for electric car purchases, effective October 1. This change prompted consumers to expedite their car purchases. Improvement was also noted outside the U.S., with the launch of new versions of Model 3 and Model Y likely supporting demand. In China, 6-seat Model Y L and Model 3, featuring a range of up to 830 kilometers on the CLTC cycle, were introduced. The company’s international sales seem to be rebounding.

Tesla electric vehicle deliveries (thousands) and their year-on-year dynamics

Source: FactSet

Freeport-McMoRan 

In 2025, a significant disruption to the global copper supply occurred at Freeport-McMoRan’s (FCX) Grasberg mine. On September 8, approximately 800,000 tons of wet material inundated several underground levels of the mine, causing the tragic loss of seven workers’ lives. In response, Freeport revised its copper production forecast for the mine for 2026, reducing it by 35%, from ~770,000 tons to ~500,000 tons. The market reacted swiftly: on September 24, copper futures surged to $4.80 per pound.

Two other large copper mines, Kakula and El Teniente, have also faced major accidents this year. As a result, approximately 1.1 million tons of copper are removed from global supply in 2025-2026. The total reduction represents about 4-5% of the annual global copper production and is expected to impact the market until 2027. Considering the structural supply deficit and strong demand, we project copper prices to increase to $5.00 per pound by the end of 2025 and rise further to $6.00 per pound in 2026-27.

Supply Balance in the Copper Market Post-Capacity Retirement

Sources: Freedom Broker, ICSG.
Note: In the chart, the balance is calculated as a supply deficit / surplus, in relation to the total annual demand