Legendary investor Jeremy Grantham has called for a 70% stock market crash, pointing to frothy valuations and IPO mania as warning signs. But the current earnings data tells a different story — one where real profits are growing fast enough to meaningfully support today’s elevated multiples. At the center of that case is the semiconductor sector, and no name captures the moment better than Micron Technology (MU), which just guided for approximately $50 billion in revenue next quarter against a Wall Street consensus of $43.6 billion. That is not a beat — it is a completely different zip code, and it has implications for how investors should think about the broader market.
The bull case rests on earnings, not euphoria. According to IDC, total global semiconductor revenues are projected to surge 52.8% in 2026 to hit a record $1.29 trillion. The memory segment is at the epicenter: DRAM revenues alone are expected to nearly triple to $418.6 billion this year, driven by insatiable demand for high-bandwidth memory from AI hyperscalers and data center buildouts. Wells Fargo expects headline S&P 500 earnings growth of 22% year-over-year in Q2. FactSet’s forward earnings data shows today’s valuations are at least partly supported by real, growing profits rather than pure multiple expansion — a structurally different setup from the dot-com era, when P/E ratios went to the moon while actual profits barely budged. Alpine Macro data confirms it: today’s tech boom features compounding earnings per share with relatively flat multiples.
None of this means investors should be complacent. Grantham’s broader warning — that IPO mania has historically appeared near market inflection points — deserves respect. The memory and semiconductor trade is crowded, and double-digit profit-taking pullbacks are always possible. But profit-taking is not a crash, and the earnings momentum underpinning these stocks is unlike anything from the dot-com era. For retail investors, the takeaway is to stay selective: focus on semiconductor names with real AI-driven demand, size positions thoughtfully, and keep dry powder for pullbacks. The AI supercycle has real earnings behind it — and Micron’s blowout guidance quarter is the clearest evidence yet.
