Big Oil is riding high. Exxon and Chevron were due to post one of their most profitable quarters ever on Friday morning. Memory chip stocks have done far better on the scoreboard. Spencer Jakab, who writes Heard on the Street for the Journal, thinks oil has less far to fall when its boom ends. That's a warning about a stock we hold.
Start with the gains. Exxon (XOM) is up 20% and Chevron (CVX) 24% since fighting began in Iran. Micron (MU) is up 1,000% since early 2025. Sandisk (SNDK), another memory maker, is up about 3,600%. Both kinds of business are famous for booms that end. High prices make buyers use less and push makers to build more.
Jakab's test is simple. Compare each stock's gain with the rise in its expected free cash flow, the money left after paying the bills. For the oil giants, the two roughly match. Memory shares rose about 2½ times as much as the rise in their expected cash through fiscal 2028. Traders are busy too. Each Micron share changed hands six times as often as an Exxon share this year. One memory fund, started in April, grew faster than any ETF before it.
Why he leans to oil
A Texas refinery or a Louisiana gas terminal got a bit more valuable once the Strait of Hormuz was blocked. China is pouring money into its own chips and could one day flood the memory market. Tech also finds its way around shortages faster than oil does. People keep cars for a decade. Few keep a phone that long, he points out. His line is that the two are "apples and oranges, but money is money." On Thursday, Oct. 29, Micron fell $48.96, about 5%, to $934.27. By our own pull at midday Friday, it was down another 7.02%, and Sandisk was down about 15%. Exxon and Chevron were both up in the same pull.
Our read
This is an Investments/Risk and Behavioral story, IN04. A cyclical business is one whose profits swing through booms and busts. The danger comes when the market gives it a forever price. Micron is held at weight in 23 of our model books. On Saturday, Oct. 17, the desk raised it to 1% in the ten North Star books as part of the first third of the reserve. Nothing has been bought or trimmed since. Sandisk sits in 1 book. Exxon is held at weight in 34 books and Chevron in 37, as the energy hedge. Jakab's column doesn't say Micron's boom is over. It says the price already counts on a long one. We're on watch.
Here's the check for your own plan. If you own Micron, Sandisk or a chip fund, look this week at what share of your total it has become. A stock up 1,000% can quietly turn a small bet into a big one. Write down the most you'd want in any one boom-and-bust industry. Then see whether you're over that line today. It's easier to shut the windows before the wind picks up, and a review is a good place to set that cap.