Newmont Stock Is Interesting, but Here's What I'd Buy Instead

Newmont rallied strongly in 2025—its shares gained over 160%—but still returned just 69% over five years, lagging both gold and the S&P 500. Micron, meanwhile, has emerged as an AI-related value play after tripling in 2025; it trades at a forward P/E of ~9 and a PEG of ~0.50, reported revenue growth of 57% YoY in Q1 FY26 with net income nearly tripling, and its Cloud Memory business almost doubled YoY and now represents over one-third of revenue. Micron has guided to record revenue, gross margin, EPS, and free cash flow in Q2 FY26, and the article argues that accelerating cloud/AI memory demand and the company’s low valuation could support substantial upside over the medium term.

Analysis

Market structure: The immediate winners are Micron (MU), DRAM/HBM suppliers (Samsung, SK Hynix), and AI chip makers (NVDA, AVGO) that rely on high‑bandwidth memory; losers are cyclical gold miners like Newmont (NEM) if capital rotates out of commodities. Memory pricing power has rebooted — Cloud memory demand (MU’s CMBU ~35% of sales, nearly 2x YoY) implies tighter near‑term supply with lead times of 3–9 months and upside to spot DRAM/HBM prices if capex doesn’t expand aggressively.

Risk assessment: Tail risks include a rapid memory-price collapse (>30% drop) from aggressive capex or an AI spending pause, and geopolitical/export controls that restrict shipments to China; both would cut MU revenue by >20% in 12 months. Near term (days–weeks) momentum and earnings/guidance drive headlines, medium term (quarters) inventory and ASP trends matter, long term (years) structural AI adoption vs memory cyclicality determines valuation.

Trade implications: Tactical trades favor MU exposure: buy-side size 2–4% with phased entries over 4–6 weeks, targets +40–100% over 12–36 months; hedge with 3–6 month 15% OTM puts sized to cover 50% of position. Pair opportunity: long MU / short NEM to play rotation away from commodities into AI memory (target pair return +30%, stop −20%). Options: use 4–6 month call spreads (buy ATM, sell +30–40% OTM) to cap cost while keeping upside.

Contrarian angles: Consensus underprices the cyclicality risk—MU’s 9x forward P/E and PEG 0.5 assume durable margin expansion; history (2016–18 memory supercycle) shows fast reversion if supply chases demand. If Cloud customers inventory build stalls or Samsung/TSMC announce incremental capacity, MU could see double‑digit EPS downgrades within two quarters, so size and hedges must assume 25–40% downside scenarios.

Key Decisions for Investors

• Establish a phased 2–4% portfolio long position in Micron (MU) over 4–6 weeks; use a hard stop at −20% from entry and a 12–36 month target of +40–100% contingent on sustained Cloud memory revenue growth and ASPs.
• Implement a pair trade: long MU (2%) / short Newmont (NEM) (1–2%) to express rotation from commodities to AI memory; unwind if gold rises >10% from current levels or MU misses guidance by >10% for two consecutive quarters.
• Execute an options hedge: for any MU position >2% notional, buy 3–6 month 15% OTM puts sized to cover 50% of the position and fund with selling a 4–6 month call spread (sell +30–40% OTM) to reduce premium outlay.
• Trim exposure to gold miners: reduce NEM positions by ~30% within 30 days and reallocate proceeds to AI semis (MU, NVDA, AVGO) with no single new name >2–3% position; monitor CHIPS Act and US export control announcements over the next 30–60 days before increasing MU exposure beyond 4%.