This Is a Re-Industrialization of America.

Dear Reader,

This is Dylan Jovine with Behind the Markets.

Happy Friday. Today is Friday, June 26th. TGIF.

Yesterday I mentioned Micron in passing, but I didn't have time to go through the numbers.

Today I want to do that — because they are eye-popping, and what they tell us about the AI trade, inflation, and the sector overall is genuinely important.

Before I get into the numbers, let me share something I've learned doing this for 35 years.

The Single Most Important Metric on an Income Statement

Whenever I'm evaluating a company, I always start with gross margins.

It's the single most important metric on an income statement.

Gross margin tells you the underlying economics of the business.

Take AirPods for example.

What does it cost to gather the materials, assemble the components, get it on an assembly line?

Gross margin is that cost expressed as a percentage of revenue.

When a neighbor, a son, a daughter asks you to look at a company — go right to the gross margins first.

Find out if it's naturally a profitable business.

That's rule number one.

Micron's Numbers

Revenue this quarter: $41 billion versus $20 billion in the prior quarter.

Over 100% growth.

But here's the eye-popping number.

Gross margin: 84.9%.

That is now the highest gross margin in the entire tech industry.

Micron just took the gross margin crown.

For context — Meta, the former leader, sits at 81.9%. NVIDIA is at 75%.

What That Gross Margin Is Actually Telling You

Here is something I've watched repeat over and over in my career with memory companies.

The normal cycle goes like this.

Prices peak.

Then for 12 to 18 months, all three major players — Micron, Samsung, SK Hynix — pour billions into new capacity.

They overinvest.

They end up with a hangover.

The stocks crash.

Then the next cycle begins.

But right now Micron isn't really building new factories.

What's happening instead is they're raising prices.

The hyperscalers — the massive cloud providers building out all these data centers — cannot get enough memory.

And Micron doesn't have enough to go around.

So they're jacking up prices and making these deep-pocketed Mag 7 players pay more.

That is what an 84.9% gross margin looks like.

It's pricing power.

And it's something I genuinely haven't seen in 35 years of doing this.

Tim Cook, the outgoing CEO of Apple, said the same thing this week.

"I haven't seen this in forty years — just this rush in."

The Inflationary Ripple Effect

Here is what most people aren't thinking about.

When Micron raises prices, it doesn't stop at the hyperscalers.

Apple has to pay more for iPhone components.

Video game consoles — Microsoft, Sony, Nintendo — pay more.

It filters through to consumer purchases across the board.

Electricity prices have gone up 6% nationwide.

This is where you start to see the data center backlash coming from.

The costs are real and they're showing up everywhere.

The Bigger Picture

The projection I read just yesterday puts the total AI buildout at $7.5 to $8 trillion through 2031.

This is a stampede.

And it genuinely reminds me of the histories I've read on the post-Civil War railroad buildout.

America was sick of war, sick of death, and it just turned the page and started building.

Manifest destiny.

We saw it again in the '20s — radio, television, the technology boom.

We saw it in the '90s with the telecom buildout that drove the internet.

But this is happening at a speed and scale as a percentage of GDP that I have not seen before.

Let's hope this money doesn't go to waste.

If someone figured out how to run AI on a local computer that didn't need massive data centers, a lot of this spending would look very different.

But the smartest scientists on the planet — the ones working at all the Mag 7 firms — see it differently.

And the hyperscalers are already locking in long-term contracts with corporate clients, creating toll bridge scenarios around AI infrastructure.

This is a re-industrialization of America.

That's not hype. That's not marketing. That's not a political statement.

It technically began under Biden.

Trump has let it loose.

And we are all living through it together.

Think about that this weekend.

How lucky we are to be Americans.

How fortunate we and our kids are to be watching this unfold in real time.

Have a wonderful weekend with your family.

I'll see you on Monday.

“The Buck Stops Here,”