Micron CEO Sanjay Mehrotra. Image generated by AI

Article by Zhou Xiaoyan

Editor | Xu Qingyang

After the U.S. market closed on September 30, Micron Technology announced its fiscal fourth quarter and full-year results for the fiscal year 2026 ending September 3, 2026.

In the fourth fiscal quarter, Micron's revenue reached $54.23 billion, a year-on-year increase of 379% and a quarter-on-quarter increase of 31%; net profit was $37.7 billion, with diluted earnings per share of $32.87. On a Non-GAAP basis, net profit was $38.4 billion, with earnings per share of $33.42.

Both revenue and profit have far exceeded Wall Street expectations. Analysts surveyed by LSEG had previously on average expected revenue of $51.07 billion and earnings per share of $31.61.

In fiscal year 2026, Micron's total revenue was $133.19 billion, 3.6 times that of the previous fiscal year; net profit was $84.97 billion, with earnings per share of $74.33; under the Non-GAAP measure, net profit was $86.76 billion, with earnings per share of $75.52. Operating cash flow reached $89.68 billion, more than four times the $17.53 billion of the previous fiscal year.

Along with exceeding expectations in performance, Micron's guidance for the next fiscal quarter also exceeded expectations. Revenue for the first quarter of fiscal year 2027 is expected to be approximately $61.5 billion, nearly 8% higher than the analysts' average expectation of $57.0 billion. Adjusted earnings per share are expected to be $38.15, also higher than the market expectation of $35.40.

Micron CEO Sanjay Mehrotra stated that Micron delivered a record performance in fiscal year 2026 and expects an even stronger fiscal year 2027. He emphasized that AI is becoming super intelligence (SI), and storage enhances this intelligence as well as the competitiveness of customer platforms.

After the earnings report was released, Micron's stock price rose slightly by about 1% to 2% in after-hours trading. Since the beginning of this year, Micron's stock price has increased by about 273%, and over the past 12 months, it has risen by more than 500%, with a market value exceeding $1.2 trillion, making it one of the best-performing components of the S&P 500 index.

01 Gross Profit Margin 'Sky-High'

Micron's financial data for the fourth fiscal quarter is reshaping every aspect of understanding in the memory industry.

In terms of revenue, Micron shows no signs of slowing down after 12 consecutive quarters of growth. In the fourth fiscal quarter, the gross margin reached 86.8%, and on a Non-GAAP basis, it reached 87%. In the same period last year, these two figures were only 44.7% and 45.7%, respectively. In one year, the gross margin has almost doubled, even surpassing Meta and NVIDIA.

In other words, for every 100 dollars Micron earns, after deducting production costs, the gross profit is nearly 87 dollars. This leap in profitability is the most direct evidence of the memory chips being in short supply and prices remaining high.

Changes in operating expenses are also noteworthy. Operating expenses for the fourth fiscal quarter were $3.296 billion, nearly double the $1.738 billion of the previous quarter. The main reason for the significant increase in expenses is that Micron is ramping up R&D investment to accelerate the development of next-generation products. Although the absolute value is growing rapidly, against the revenue base of $54.2 billion, the operating expense ratio is still only 4.7%, heavily diluted.

In the end, Micron's operating profit margin for the fourth fiscal quarter reached 80.7%, and 82.3% on a Non-GAAP basis. In the previous quarter, the figures were 80.4% and 81.2%, continuing to rise quarter over quarter.

In terms of cash flow, operating cash flow for the fourth fiscal quarter was $43.97 billion, 7.7 times the $5.73 billion of the same period last year, and up 73% from $25.39 billion in the previous quarter. After deducting capital expenditures, adjusted free cash flow reached $33.2 billion. As of the end of fiscal year 2026, Micron held a total of $73.48 billion in cash, marketable investments, and restricted cash.

"Micron's outstanding results and forecasts should nail the coffin for those who continue to doubt the resilience of AI development," said Bob O'Donnell, Chief Analyst at TECHnalysis Research. In his view, these results prove that AI-driven storage demand is not a short-term hype, but a structural trend supported by real orders and prices.

02 Data center is the absolute engine

Micron's four major business divisions all experienced rapid growth in the fourth fiscal quarter without exception, with data center-related business remaining the core driving force.

The cloud storage business unit generated revenue of $16.283 billion, a year-on-year increase of 258% and a quarter-on-quarter increase of 18%. The gross margin was 83%, and the operating profit margin was 76%. This unit is highly correlated with HBM and server-specific DRAM, directly benefiting from the continuous massive investments by cloud computing providers in AI infrastructure. Technology giants such as Amazon and Google are spending over $730 billion on AI infrastructure this year, with storage being a key component.

The fastest-growing segment is the core data center business, with revenue skyrocketing from $1.577 billion in the same period last year to $18.002 billion, an increase of more than tenfold, and a quarter-on-quarter growth of 56%. The department's core products include data center-grade solid-state drives and traditional enterprise server DRAMs. The gross margin reaches 90%, and the operating profit margin is as high as 85%, making it the most profitable among all departments.

The Mobile and Client Business Unit achieved revenue of $13.114 billion, a year-on-year increase of 249% and a quarter-on-quarter increase of 14%. The gross margin was 90%, and the operating profit margin was 88%. In the same period last year, the gross margin of this unit was only 36%. The AI-driven memory upgrade wave has fully penetrated the consumer electronics field, and the price increases caused by memory shortages have allowed this traditional business segment to also enjoy excess profits.

The Automotive and Embedded Business Division achieved revenue of $6.824 billion, a year-on-year increase of 376% and a quarter-on-quarter increase of 47%. The gross margin was 84%, and the operating profit margin was 79%. The rapid growth in this segment reflects that memory shortages have spread from data centers to automotive, industrial, and other end markets.

From the perspective of product structure, DRAM still remains the pillar of Micron's revenue. In the fourth fiscal quarter, DRAM revenue was $39.8 billion, an increase of 343% year-on-year, accounting for 73% of total sales. Among them, the contribution of HBM (High Bandwidth Memory) is particularly crucial, as AI servers require a large amount of HBM to work with GPUs to handle AI workloads, while global supply is severely lacking. Micron is the only manufacturer in the United States that produces HBM.

In terms of product progress, Micron achieved several milestone nodes in the fourth fiscal quarter. The industry's first 512GB ultra-high-density DDR5 RDIMM module has begun sample deliveries, with speeds up to 9200MT/s. The 8800MT/s high-speed server RDIMM module based on 1-gamma has completed multiple customer certifications. Revenue from the server LPDDR SOCAMM product portfolio more than doubled quarter-on-quarter. High-performance 7600 PCIe Gen5 and 9650 PCIe Gen6 SSD products have been shipped to leading market customers for KV-cache applications.

On mobile, the 6-channel 1-gamma LPDDR5X has shipped to flagship mobile devices. AI workstation products have won design orders from all tier-one OEM customers. LPDDR6 products based on 1-gamma have begun sample shipments to multiple physical AI markets.

The production plan for HBM is also accelerating. The ramp-up speed for mass production of 12-layer stacked HBM4 is twice that of HBM3E, and HBM4 revenue has already surpassed 1 billion US dollars. Micron expects the yield improvement speed of mature 12-layer stacked HBM4 to be much faster than that of the previous generation.

Mehrotra mentioned that future memory demand will continue to tilt towards higher-performance and higher-value products, which are more complex and more costly. The generational shifts from LP5 to LP6, DDR5 to DDR6, and HBM are all accompanied by rising per-bit costs. Coupled with the ramp-up of large-scale new production capacity in the coming years, DRAM costs are expected to continue rising from current levels.

03 $250 billion gamble

Faced with record profits and seemingly endless demand, Micron's choice is to expand production at full scale.

In the fourth fiscal quarter, Micron's net capital expenditure has already exceeded previous market expectations. More importantly, it is about future investments. Micron expects capital expenditures in the first quarter of fiscal 2027 to be about $11.5 billion, totaling $25 billion for the first half of the year, with further acceleration in the second half. In fiscal 2027 and 2028, as the supply and demand situation of storage further tightens, capital expenditures are expected to be even higher.

The destinations of these investments are new factory constructions around the world.

In the continental United States, Micron is building two giant wafer fab campuses. Construction of the ID.1 and ID.2 fabs in Boise, Idaho is progressing smoothly, with ID.1 expected to produce its first wafers by mid-2027 and ID.2 by the end of 2028. The massive campus in Clay, New York broke ground this January, with a total investment of up to $100 billion, planning to build up to four wafer fabs, and is expected to start producing wafers in the second half of 2028. Micron also announced that its planned U.S. investment through 2035 has been increased to more than $250 billion.

In addition to the United States, Micron's global production capacity layout is also advancing. At the newly acquired factory in Hsinchu, Taiwan, the existing 27,900-square-meter wafer fab is expected to begin mass shipments by mid-2027, about a quarter earlier than previously anticipated. A second cleanroom of the same scale has already begun construction and will support EUV equipment.

Construction in Japan and Singapore is also progressing as planned. The Singapore plant will become another advanced packaging center after Taiwan, China, and is expected to make a substantial contribution to HBM packaging capacity starting in the first half of 2027. The Manassas plant in Virginia recently started production of 1-alpha DDR4 technology, which will better support the demand for traditional products in the automotive, industrial, medical, and aerospace markets.

In terms of research and development, Micron announced in August that it will invest up to $10 billion over the next 10 years to build a 'long-term top-tier research facility' in Boise. The ramp-up of 1-gamma DRAM and G9 NAND is going well, and they are expected to become the highest-yield nodes in Micron's history. The development of next-generation DRAM and NAND is also progressing smoothly, and mass production is expected to begin in the second half of the 2027 calendar year.

Micron pointed out in its financial report that driven by AI demand, the tight memory supply is expected to continue beyond 2027. This means the supply-demand imbalance will not ease in the short term. According to industry analysis, the capacity of large new factories is expected to be gradually released in about a year, while Micron’s larger-scale production capacity will not be put into operation until 2028 and 2029.

To ensure demand for its massive investments, Micron is vigorously promoting 'Strategic Customer Agreements (SCAs).' Mehrotra revealed that the company has signed multiple long-term strategic customer agreements with clients such as data center operators and automakers, locking in sales for 3 to 5 years. These agreements feature a 'price floor,' directly linking downstream customer demand with Micron's future supply, providing predictability for the company's continued strong financial performance.

Micron explicitly mentioned in its financial report that strategic customer agreements provide 'additional confidence in the durability of financial performance,' and the company is 'increasing investment in technology, products, and manufacturing to help drive the advancement of superintelligence together with customers.'

04 Tripartite Rivalry

Micron's explosive growth is not an isolated case; it reflects the overall state of the memory industry.

The global HBM market is currently dominated by three companies: Samsung Electronics, SK Hynix, and Micron. All three are expanding production at full speed, but supply growth still cannot keep up with the explosive demand from AI.

SK Hynix is currently leading in the HBM market share. The company has just announced plans to go public in the United States, seeking to raise about $29 billion to further capitalize on memory demand. SK Hynix's CEO previously stated publicly that he expects storage shortages to continue beyond 2030. This assessment is more aggressive than Micron's statement of 'continuing after 2027.'

Samsung is also conducting large-scale new HBM factory construction in South Korea. As the world's largest memory chip manufacturer, Samsung's capacity expansion will have an important impact on the future supply and demand pattern.

Among the three, Micron has the smallest market share in HBM, but its market value has already exceeded $1.2 trillion. Micron's strategic goal is to make its HBM market share approach its overall DRAM share, so that it can both serve the high-value HBM demand and reserve sufficient non-HBM supply for diverse end markets such as data centers, consumer, automotive, and industrial sectors.

The memory chip industry has always been known for its cyclical swings between prosperity and downturns. But the uniqueness of this cycle has made bulls firmly believe that "this time it's different."

Special contributor Jin Lu also contributed to this article