Micron is having a moment. The company making memory chips for the world announced Q2 results last week, and the results speak for themselves: revenue up 345%, gross margins nearly doubled from 37% to 85% in two years, and a company that was losing money in 2023 is now printing $25 in earnings per share. The stock has reflected all of this, with explosive performance through 2025 and into 2026.

So what's driving it? It’s classic commodity dynamics: years of dirt-cheap memory prices led to chronic underinvestment across the industry. Yesterday’s underinvestment creates a supply bottleneck today. The bottleneck sends prices skyward and Micron, one of the few large-scale producers left standing, is reaping the rewards.

Micron’s biggest customers are not happy about this. Apple and Microsoft have started raising prices on consumer products (iPads, MacBooks, Xboxes) citing "unsustainable" memory prices as the reason. Whether you believe that framing or not, it's a notable move.

Apple went even further: the company has been lobbying the Trump administration for permission to source memory from CXMT, a Chinese manufacturer that the Pentagon has blacklisted over alleged ties to the People's Liberation Army.

This reads as a pressure campaign. Apple and Microsoft applying public and political heat on Micron, hoping, perhaps, to soften pricing at the negotiating table. Not sure they will actually get what they want from the government. But one thing is certain, this will raise some eyebrows in Washington.

Micron’s management was quick to point out that in 2023, when DRAM prices collapsed under a supply glut, buyers like Apple were the ones loading up on cheap inventory. Nobody was complaining then. The cycle giveth, and the cycle taketh away.

This episode highlights the type of relationship shared by Micron and its largest customers. Memory chips are a commodity product. Unfortunately, Micron does not have the upper hand here. The owners of commodity business are price takers, not price makers.

Companies like ASML, or Taiwan Semiconductors, are true monopolies in this space, vital choke points in the semiconductor supply chain. They could theoretically price gouge their customers. Despite this, they are some of the most collaborative companies, working hand in hand with customers, even giving them advances from time to time and creating products based on their needs. That collaborative posture is one of the necessary ingredients to a deeply sustainable moat.

For an investor trying to compound their capital over the long term, finding businesses with strong moats is a must. Without a moat, profits are short-lived; well-funded competitors will fight tooth-and-nail for every inch of market share of a profitable market.

This episode is a useful reminder that a company with no competitive moat can still generate explosive short-term profits. The stock price of a lower quality company can still surge hundreds of percentage points in a few months as people chase the flow of money.

But one thing you can count on is that bottlenecks don't last forever. Human ingenuity is remarkably good at routing around supply constraints, whether through new entrants, substitutes, customer pressure, or government intervention. Without a moat, you're riding a wave. Micron is riding it well right now. The question is what happens when it breaks.

Last week, prediction market Kalshi received approval from the CFTC (the US derivatives regulator) to offer Bitcoin perpetual futures contracts on American soil. To understand why this spooked Wall Street, you need to know the difference between a regular futures contract and a perp.

A standard futures contract has an expiry date: you agree to buy or sell an asset at a fixed price on a specific future date, and when that date arrives, the contract settles and closes. A perpetual future, or "perp," never expires. You can hold it indefinitely.

Investors didn't waste any time reacting. CME Group fell over 8% in two days. Cboe plunged 17% in a week. Nasdaq and Intercontinental Exchange weren't spared either. These are the companies that own and operate the financial exchanges where stocks, derivatives, and futures contracts are bought and sold: the plumbing of global financial markets.

Now that the CFTC has granted Kalshi the right to offer perp contracts (a simpler, cheaper, more accessible product that retail traders globally have preferred for years), the regulatory shield is gone for traditional exchanges. And if regulators extend this approval beyond Bitcoin to other asset classes, the threat stops being a footnote and starts being an existential question.

For years, financial exchanges have been considered textbook quality businesses: dominant market positions, recurring revenue, and moats that seemed almost impossible to breach. Those moats rested on two pillars. First, regulation: you needed a government licence to operate an exchange, and those licences were not easy to come by. Second, liquidity: the more traders on a platform, the tighter the prices and the better the experience, which attracts more traders in a self-reinforcing loop.

The reality about moats built on government regulation is that they are only as durable as the political will that created them. Many so-called “quality” companies today rely on moats that are entirely granted by a government’s generosity and good will.

Tobacco companies enjoy advertising bans that make it so new competitors can never get off the ground. Pharmaceutical companies build entire business models around exclusivity periods and reimbursement frameworks that depend on a current government’s mood for affordable drug pricing. Telecoms have long treated spectrum licences as permanent competitive barriers… until regulators decide to auction new bands or mandate infrastructure sharing.

In each case, the moat can look permanent right up until it didn't. The lesson for investors is not to avoid regulated businesses; many of them are excellent. It is to ask honestly: how much of this moat is earned through genuine competitive advantage, and how much of it was simply handed over by Washington? The answer changes how you should value it, and how worried you should be when the political winds shift.

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