AI Boosts Micron Earnings
Micron reports record quarterly revenue driven by soaring artificial intelligence demand.
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Key Points
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Micron’s quarterly revenue was led by DRAM, which brought in a record $39.8 billion, while NAND flash generated $14.1 billion. Its core data-center unit recorded an 90% gross margin, and the cloud-memory unit, which sells HBM, recorded an 83% margin.
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Micron said it is working with Nvidia on what it called the industry’s first custom HBM4E product. It also plans about $25 billion in capital spending in the first half of its new financial year, while cautioning that output from new clean rooms ramps up gradually.
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Micron’s long-term strategic customer agreements are intended to protect against a downturn in memory sales and give the company more visibility into future revenue; the agreements lock in the lowest possible prices for memory and storage chips.
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Wedbush analyst Matt Bryson said Micron could favor share buybacks once restrictions tied to its CHIPS Act funding expire on Dec. 9, citing the cash the company has accumulated.
Micron Technology posted a record fiscal fourth-quarter revenue of $54.23 billion, crushing Wall Street's $51 billion forecast, as artificial intelligence demand for memory chips pushed margins to historic highs. Yahoo Finance reported adjusted earnings of $33.42 per share, well ahead of expectations, driven by record DRAM sales of $39.8 billion and high-bandwidth memory (HBM) margins of 83%. CEO Sanjay Mehrotra warned that memory supply will stay tight through 2028, with roughly three-quarters of Micron's 2027 output already committed to customers.
The company projected $61.5 billion in revenue for the current quarter and locked in 26 long-term strategic customer agreements that cover more than 35% of revenue through 2030. The Street reported that Micron is investing heavily in new production lines in Taiwan and globally, with facilities expected online in 2027–2028. Shares moved only modestly after the announcement as investors weighed sky-high valuations against the durability of memory prices.
AI Boom Drives Memory Margins to Record Peaks
Micron's data-center unit posted a jaw-dropping 90% gross margin on $18 billion in revenue. The company's cloud-memory division, which sells high-bandwidth memory chips to AI accelerator makers, hit an 83% margin. Jim Cramer at Yahoo Finance noted that Mehrotra said AI is becoming "Super Intelligence," and memory is essential to that mission. The company is also working with Nvidia on the industry's first custom HBM4E product, cementing its role in the AI infrastructure arms race.
Supply Will Remain Scarce Through 2028, Micron Says
Micron CEO Mehrotra stated there is "no line of sight" to when memory supply and demand will balance. About three-quarters of the company's 2027 memory output is already spoken for by customers, and much of next year's high-bandwidth memory is committed. Kansas City Star reported that Micron warned it cannot predict when the shortage will ease. This tight supply is expected to keep memory prices elevated, directly raising costs for cloud providers and hardware makers through 2028.
Long-Term Customer Agreements Lock in Growth Through 2030
Micron signed 26 strategic customer agreements with major AI and cloud firms that guarantee over 35% of revenue through 2030 at preset prices. These deals protect Micron from future memory downturns while giving customers price certainty in an expensive market. Yahoo Finance reported the company is planning roughly $25 billion in capital spending in the first half of its new financial year. New cleanroom production in Taiwan and advanced packaging lines are scheduled to launch in 2027–2028, though Micron cautioned that output ramps up gradually over time.
Buyback Blitz Expected After Federal Restrictions Expire
Micron's statutory share-buyback restrictions tied to its $6.44 billion CHIPS Act grant expire on December 9, 2026. Wedbush analyst Matt Bryson said the company could aggressively repurchase shares once those restrictions lift, given the large cash Micron has accumulated. Bryson maintains an Outperform rating with a $1,400 price target. Wall Street remains overwhelmingly bullish, with 21 Buy ratings versus just 1 Hold, though some traders caution investors to watch whether margins hold as new capacity ramps up.
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