Micron Technology
MU · NASDAQSemiconductors · DRAM / HBM Memory
Since the Report − 4.9%
Close on Report DayJun 24
$1,048.51▲ 15.7%Report-Day Move
- Market Cap(Today)
- ≈ $1.13 T
- 1Y Return(At Report)
- + 707%
- P/E($45.12 · Trailing 12M)
- 22.1
- Net Margin(Trailing 12M)
- 55.9%
Micron's revenue went from $9.30 billion to $41.46 billion in a single year, gross margin widened from 37.7% to 84.6%, and non-GAAP earnings per share of $25.11 came in 17% above expectations. The stock rose 15.7% the next day; the real surprise was not the quarter but the $50 billion guidance issued where the market had penciled in $43.4 billion. From here, what matters is the pace of the HBM4 ramp and when the capacity the industry is adding turns the cycle.
Revenue (Q3)
$41.46B
▲ 346% YoY
Gross Margin
84.6%
+46.9 Pts YoY
EPS (Non-GAAP)
$25.11
17% Above Expectation
DRAM Revenue
$31.3B
76% of Total · ▲ 343%
HBM4 Revenue
Over $1B
Ramp Twice As Fast As HBM3E
Q4 FY26 Guidance
$50B
Margin ~86% · EPS $31.00
Quarterly Revenue ($ Billion)
9.30
11.32
13.64
23.86
41.46
$49.0–51.0B
- Q3 FY25
- Q4 FY25
- Q1 FY26
- Q2 FY26
- Q3 FY26
- Q4 FY26
- Annual Revenue Growth
- ▲ 346%$9.30B → $41.46B
- DRAM Share
- 76%$31.3B · ▲ 343% YoY
- Automotive and Embedded
- $4.63B79% Margin · Lowest of the Group
Q4 FY26 Company Guidance
- Revenue49 – 51 billion
Midpoint 50.0 · Market Expectation 43.4Far Above Expectation ▲
- Earnings Per Share (Non-GAAP)30 – 32 $
Midpoint 31.00 · 25.11 in Q322% Above Expectation ▲
- Gross Margin86%
84.6% actual in Q3 FY26+1.4 pts Expansion ▲
The blue band is the company's low–high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. Axis is ±20% around the midpoint.
- Operating Expenses (Non-GAAP)
- ~$1.65BGAAP Equivalent ~$1.86B
- Capital Expenditure (Q4)
- ~$10BFY26 Total ~$27B
- Free Cash Flow (Q4)
- Over $30B$18.30B in Q3
“Micron's record fiscal Q3 financial results and even stronger outlook for Q4 reflect the strategic value of memory in the AI era.”
- Memory in the AI era
- Demand keeps exceeding supply
- 16 strategic customer agreements
Summary
Micron reported its third quarter of fiscal 2026, ended May 28, 2026, after the close on June 24, and posted the largest quarter in the company's history. Revenue reached $41.46 billion, four and a half times the $9.30 billion of a year earlier, a 346% annual increase. Gross margin came in at 84.6%, an expansion of 46.9 points in a single year. Non-GAAP earnings per share of $25.11 beat the $21.40 market expectation by 17%. DRAM revenue alone was $31.3 billion, or 76% of the total, growing 343% year over year; NAND stayed at $9.9 billion. Operating cash flow was $25.39 billion and adjusted free cash flow $18.30 billion.
The stock closed the earnings day at $1,048.51, rose 15.7% the next day to $1,213.56 and touched an all-time high of $1,255 intraday. What drove the reaction was not the quarter itself but the guidance for the next one: the company pointed to $50 billion in revenue and $31.00 in earnings per share, while the market expected $43.4 billion and $25.50. That guidance implies another 21% of growth in three months and a margin rising to 86%. Management also disclosed 16 signed strategic customer agreements, 14 of which carry roughly $100 billion of revenue at minimum price. The stock has since pulled back from that peak; the August 7 close was $877.57.
The quarter itself is close to flawless: every measure beat expectations, guidance landed far above the market's number and cash generation set a record. What separates Micron from the NAND and hard-drive players in the same memory cycle is that its growth comes mainly from DRAM and HBM; these products sit directly next to the AI accelerator and their supply side is far tighter. The company says HBM3E and HBM4 capacity is sold out through 2027. The real question is not price but duration: fiscal 2027 capital spending will exceed this year's $27 billion, and the capacity the industry adds will decide when the cycle turns. The stock's roughly 30% slide from its peak is pricing exactly that doubt.
Full Review
ClaudeThe engine of growth is DRAM, not NAND.
The most important detail of the quarter is where the revenue came from. DRAM revenue hit a record $31.3 billion, up 343% year over year, and made up 76% of total revenue. NAND revenue grew 361% to $9.9 billion but its share stayed at 24%. That split is what separates Micron from SanDisk and Western Digital in the same cycle: their story is built on NAND and hard drives, while Micron's engine is the DRAM inside the AI server. The source of the growth is equally clear: the CFO said DRAM prices rose in the low-60s percentage range and NAND prices in the mid-80s. Against that, DRAM bit shipments increased only in the low-single-digit range and NAND bits in the mid-single-digit range. So while revenue more than quadrupled, the quantity shipped barely moved; almost all of the increase came from price and mix. That is a structure that lifts margin fast but raises dependence on price by exactly the same amount.
The HBM4 ramp is twice as fast as HBM3E.
Micron said it has already booked over $1 billion in HBM4 revenue and that the 12-high HBM4 ramp is tracking twice as fast as HBM3E. The product is built on 1-beta DRAM and is in high-volume shipment for the lead customer's platform; qualification samples have also gone to multiple end customers. The next step is HBM4E on 1-gamma DRAM, with volume production planned for calendar 2027. The company noted that its 1-gamma DRAM and G9 NAND nodes are on track to become the highest-volume nodes in its history. On capacity the picture is unambiguous: HBM3E and HBM4 are fully booked through 2027, with demand spilling into 2028. Micron has also shipped 256GB DDR5 RDIMM qualification samples built on 1-gamma DRAM with advanced 3D die stacking to key server ecosystem enablers. HBM is the memory product that holds price best and has the fewest competitors.
Data center is running at $100 billion a year.
CEO Sanjay Mehrotra said data center revenue exceeded $25 billion in the quarter, an annualized run rate of more than $100 billion. In the business unit breakdown, Cloud Memory produced $13.77 billion of revenue at an 83% gross margin and Core Data Center $11.52 billion at an 87% gross margin. The Mobile and Client unit came in at $11.52 billion, exactly matching one of the data center units; Automotive and Embedded was the smallest at $4.63 billion and the lowest margin at 79%. Data center SSD revenue passed $5 billion and more than doubled sequentially. The real information here is concentration: roughly 61% of revenue now comes directly from the data center. That is a major advantage for as long as the cycle runs, and a one-way dependency when demand slows.
Strategic agreements build a price floor.
Micron announced it has signed 16 strategic customer agreements and said they will fundamentally transform its business model. Fourteen of the sixteen carry roughly $100 billion of cumulative revenue at minimum price. The company also projects it will receive $22 billion in cash deposits and related financial commitments under these agreements. This is not the usual structure in memory: traditionally price is set on the spot market and the producer has no protection when the cycle turns. Long-term agreements with minimum pricing put a floor under revenue in the downturn phase. The cash received up front also makes the $27 billion capital program easier to fund. It is the same logic as Western Digital's supply agreements stretching to 2031 in this same cycle; memory makers are trying to soften cyclicality by contract. Even so, agreements guarantee volume, not demand itself.
Capital spending is the cycle's real variable.
The CFO said capital expenditure will be around $10 billion in the fourth fiscal quarter, bringing full-year fiscal 2026 spending to approximately $27 billion. Quarterly capex in fiscal 2027 is expected to run above that fourth-quarter level, with more than half of the year-over-year increase coming from construction capex. That distinction matters: construction spending does not produce new bits in the near term, so it will not loosen supply over the next four to six quarters. In the long run it does the opposite. In memory's history, what ends a cycle is almost never demand stopping but the industry collectively adding capacity. Micron's management expects tight conditions to persist beyond calendar 2027; if that view is right, margins hold for several more quarters. This is the one number an investor should track: new wafer capacity coming online across the industry.
Margin is near its ceiling; the next step is harder.
Gross margin rose to 84.6% and the company guides to approximately 86% for the new quarter. A year ago the figure was 37.7%. Operating income of $33.32 billion reached 80.4% of revenue. These levels have never been seen in memory and are approaching a mathematical ceiling: when only 14% of revenue is cost of production, there is little room left for margin to widen. From here profit growth has to come from volume rather than price, and volume depends on capacity. The cash side keeps strengthening; adjusted free cash flow of $18.30 billion in the third quarter is expected to exceed $30 billion in the fourth. On how to read the valuation, the valuation guide helps, and for position sizing in a cyclical stock, the risk management guide.
Strengths
6- DRAM revenue of $31.3 billion is 76% of the total; growth comes from a product tied directly to the AI data center.
- HBM4 revenue passed $1 billion in its opening phase and the ramp is running twice as fast as HBM3E.
- HBM3E and HBM4 capacity is fully sold out through 2027, with demand spilling into 2028.
- Gross margin of 84.6% compares with 37.7% a year ago, and roughly 86% is guided for the new quarter.
- Fourteen of the 16 strategic customer agreements carry roughly $100 billion of revenue at minimum price.
- Adjusted free cash flow of $18.30 billion funds the $27 billion annual capital program out of the company's own cash.
Risks
6- Almost all of the revenue increase came from price: DRAM prices rose in the low-60s and NAND prices in the mid-80s percentage range, while bit shipments stayed in single digits.
- With 86% guided, gross margin is approaching a mathematical ceiling; profit growth from here depends on volume.
- Fiscal 2027 capital spending will exceed $27 billion; capacity added across the industry could turn the cycle.
- 76% of revenue is concentrated in DRAM; a price break in that single product group would hit the entire model.
- Data center accounts for roughly 61% of revenue; any pause in AI investment lands here directly.
- The stock has fallen roughly 30% from its June 25 peak; the market is pricing not the numbers but how long the cycle lasts.
What to Watch
6- September 21-22, 2026 — fiscal Q4 and full fiscal year 2026 results; company guidance is $50 billion in revenue, ~86% gross margin and $31.00 in earnings per share.
- Fiscal Q4 — capital expenditure is expected around $10 billion and free cash flow above $30 billion.
- End of fiscal 2026 — full-year capital spending is projected to reach approximately $27 billion.
- Calendar 2027 — volume production of HBM4E, built on 1-gamma DRAM, is planned.
- Through 2027 — HBM3E and HBM4 capacity is sold out; agreements signed for 2028 are the next step in visibility.
- Fiscal 2027 — quarterly capex rising above the fourth-quarter level, with more than half of the increase from construction spending.