NEW YORK (Real Money) -- The Micron (MU) bears look like they have lost their bets in the big DRAM chicken game. Or at least they lost their No. 1 advocate when Merrill Lynch went from underperform to buy this morning.
First, that's an astonishing turn. The analyst, Simon Woo, had been a huge and unrelenting bear. All the way up. He has fought it and fought it, always with the same logic: The pricing discipline that has almost always seemed to wreck the pricing for commodity chips -- in this case DRAMs -- would happen again just as it has pretty much every time the stock got up a head of steam. He used the standard logic: Someone would blink as pricing got good, and would start building factories and eliminate the tightness, then Micron would collapse.
I can't blame him. Many smart people have contended that has to happen. Every time I said something positive about Micron -- and I have many times -- I have run into this logic. It happened in 1995 after Micron stock went from $9 to $47 in a very brief period of time. It happened in 2000 after a dizzying $29 to $97 run.
But this time was different. There had always been multiple players in the DRAM business. There were so many players that someone always had to blink. It was illogical to think that someone wouldn't want to grab market share or perhaps buy some semiconductor equipment, put up a quick factory and cash in on that fabulous pricing.