Micron Technology reported record fiscal third-quarter revenue and gross margins, driven by surging demand for high-bandwidth memory (HBM) and other memory chips used in artificial intelligence (AI) infrastructure. The company’s stock has experienced significant volatility, reaching new highs before retreating amid broader market movements and analyst adjustments.
Financial Results and Outlook
Micron reported fiscal third-quarter revenue of $41.46 billion, quadrupling from $9.3 billion a year earlier. Adjusted earnings per share were $25.11, beating analyst estimates of $20.78. Net income rose to $28.24 billion, or $24.46 per share, up from $1.89 billion a year ago.
Gross margin reached 84.9%, up from 74.9% in the prior quarter and 39% a year earlier. The company guided for gross margin to rise to approximately 86% in the current quarter. For the fourth quarter, Micron expects revenue of approximately $50 billion, above the consensus estimate of $43.58 billion.
Business Segment Performance
- Data Center Business Unit: Sales exceeded $11.5 billion, up from $1.53 billion a year ago.
- Data Center SSD Revenue: Over $5 billion.
- Cloud Memory Revenue: $13.77 billion, up over 300% year-over-year.
- Mobile and Client Business Unit: Revenue grew over 250% to $11.52 billion.
- Automotive and Embedded Sales: More than quadrupled to $4.63 billion.
Long-Term Customer Agreements
Micron has signed 16 long-term supply agreements with customers including data center operators, automakers, and AI companies, spanning three to five years.
Approximately 14 of these agreements represent at least $100 billion in minimum contracted revenue over the remaining term, with $22 billion in cash deposits and related commitments. These agreements include take-or-pay provisions and, in some cases, fixed or ceiling pricing. Micron expects about half or more of its future revenue to come from these agreements.
Market Position and Supply Dynamics
Micron's entire 2026 production capacity for HBM is reported to be sold out, and DRAM shortages are expected to persist beyond 2027. The company stated it can currently fulfill only 50% to two-thirds of memory demand from its primary customers.
According to TrendForce, the global memory market is projected to reach $1.3 trillion by 2027, with DRAM revenue estimated at $619 billion in 2026 and $903 billion in 2027.
The three dominant memory suppliers—Samsung, SK Hynix, and Micron—are planning significant capital expenditures. Micron raised its fiscal 2026 capital expenditure forecast to $27 billion, compared to $13.8 billion in the previous fiscal year, with further increases expected in fiscal 2027. Samsung is planning approximately $73 billion in spending, and SK Hynix about $29 billion.
Stock Performance and Valuation
Micron's stock has experienced substantial gains and volatility. On the day following the earnings report, shares rose up to 19% to a new intraday record high. The stock closed at $1,132 per share, bringing the company's market capitalization to approximately $1.27 trillion, briefly surpassing Meta and Tesla before declining slightly.
Prior to the earnings release, Micron shares had fallen approximately 13% on Tuesday, its worst day since April 2025.
Analyst price targets vary widely: UBS raised its target to $1,625, Cantor Fitzgerald to $1,500, and Wells Fargo to $1,220. At the time of the earnings report, 39 of 44 analysts covering Micron rated it a "Buy" or higher.
Micron's trailing P/E ratio is 48, while its forward P/E is approximately 9.5. In comparison, Nvidia's forward P/E is approximately 23, AMD's 37, Broadcom's 33, and the S&P 500's forward P/E is higher.
Industry Risks
Analysts have noted several potential risk factors:
- If high-bandwidth memory demand weakens, the stock could decline.
- The memory industry has historically experienced boom-bust cycles when supply outstrips demand.
- Faster-than-expected capacity additions by Micron or competitors could compress margins.
- A reduction in hyperscaler capital expenditures could reduce demand.
- Approximately half of Micron's revenue remains outside long-term contracts, exposing it to spot market volatility.
- Google released TurboQuant AI, an algorithm designed to reduce memory demand, which led to a 9.88% decline in Micron shares on one trading day.
Competitor and Market Impact
Other memory and chip stocks also moved in response to market conditions. SanDisk shares rose approximately 7-13% on various days, Western Digital gained nearly 3%, and Seagate Technology added about 2%. In South Korea, SK Hynix jumped about 13% after announcing plans to raise up to $29.4 billion through a U.S. listing, while Samsung Electronics advanced around 5%. Nvidia, AMD, and Broadcom declined on some days, while Qualcomm rose about 4%.