Micron Technology has released its financial results for the third quarter of fiscal 2026, which ended May 28, 2026. This blockbuster earnings report not only beat Wall Street consensus estimates across all key metrics, but also unveiled a transformative long-term business model, signaling that the memory industry is evolving from a traditionally highly cyclical sector into high-value strategic infrastructure for the AI era. Fueled by this positive news, Micron's after-hours stock price once surged by more than 16%.
Volume and Price Both Rising: AI Demand Ignites a "Super Cycle"
Micron posted quarterly revenue of $41.46 billion, soaring 346% year-over-year and 74% quarter-over-quarter. On a Non-GAAP basis, operating profit reached $33.68 billion, soaring 12.5x year-over-year and up 105% sequentially; net income was $28.86 billion, surging 12.2x year-over-year and up 106% sequentially; EPS came in at $25.11, far exceeding analyst estimates of $20.49, while gross margin hit 84.9%.
The core driver of this profit explosion is the return of "pricing power."
On the product front, both DRAM and NAND product lines have surged in tandem. DRAM single-quarter revenue reached $31.3 billion, up 67% sequentially, while NAND Flash revenue hit $9.9 billion, up 99% sequentially. Notably, the sharp revenue growth was not driven solely by shipment expansion. DRAM and NAND bit shipments grew only low-single-digit and mid-single-digit percentages respectively, while average selling prices (ASPs) soared over 60% and 80% sequentially. Robust demand from AI servers for HBM, server DDR5, and enterprise SSDs, combined with lagging capacity expansions at wafer fabs and advanced packaging facilities, has left supply unable to respond immediately, causing prices to rise significantly faster than shipment growth.
By business segment, gross margins across Cloud Memory, Core Data Center, Mobile & Client, and Automotive & Embedded all exceeded 79%. Among them, Cloud Memory revenue grew 78% sequentially to $13.769 billion, accounting for the largest share (33%); Core Data Center gross margin hit 87%, with revenue up 103% sequentially. AI-related businesses have clearly become the absolute profit engine.
Guidance Beats Again: Supply Tightness to Persist Beyond 2027
Micron's strong guidance for the fourth fiscal quarter (June–August 2026) and beyond is even more exciting than the current fianancial results was . Micron expects Q4 revenue to rise further to $49 billion–$51 billion (versus market consensus of just around $43.2 billion), with adjusted EPS of approximately $31 and gross margin of roughly 86%.
Micron CEO Sanjay Mehrotra clearly stated on the earnings call that the AI-driven structural supply-demand imbalance will not disappear in the short term. DRAM inventories remain tight, with inventories dropping below 120 days. Industry suppliers redirecting cleanroom space from NAND to DRAM and overall limited cleanroom space constrain NAND bit supply growth.
In DRAM, industry DRAM bit shipments in calendar 2026 to grow in the low- to mid-20s percentage range, slightly above our prior outlook, with Micron's own DRAM supply growth roughly in line with the industry. For NAND, industry NAND bit shipments are projected to grow about 20% year-over-year in 2026, with Micron's supply growth somewhat less than the industry's.
Micron expects DRAM and NAND supply-demand conditions to remain tight through 2027 and beyond. Constrained by lengthy new fab construction cycles, critical skilled labor shortages, complex regulatory approvals, and continued HBM capacity crowding out conventional capacity, industry supply tightness is projected to persist past 2027, with gradual improvement only starting in 2028. This implies that the AI infrastructure build-out cycle will prove longer than the market had previously anticipated.
Business Model Reinvented: 16 SCAs Lock $100 Billion Revenue
Facing sustained strong demand, Micron is planning to fundamentally rewrite the memory industry's cyclical destiny through "Strategic Customer Agreements (SCAs)." Micron announced it has signed SCAs with 16 customers including data center, consumer electronics, and automotive sectors. Typically, these agreements have a five-year term from calendar 2026 through the end of calendar 2030 while automotive agreements generally have a three-year term.
These agreements adopt a "take-or-pay" structure, not only locking in approximately 20% of Micron's DRAM bits and one-third of NAND bits, but also transferring inventory risk downstream through price floors and ceilings and customer deposits. Micron's CEO emphasized multiple times on the call that the floor price enables a very robust gross margin for Micron, well above their peak quarterly margins in any past cycle. He also noted that products that may be more sophisticated, higher performance, higher capacities and there are provisions for products to be priced differently at a premium to the existing products when they do LPDDR6 versus LPDDR5 or DDR6 versus DDR5 or a new version of HBM.
According to disclosures, the 14 agreements, based on minimum price calculations, represent cumulative remaining floor revenue of approximately $100 billion over their remaining terms; customers have collectively provided about $22 billion in financial commitments (including roughly $18 billion in cash deposits). Micron expects that when all planned agreements are finalized, at least half of the company's revenue will fall under such long-term arrangements, greatly enhancing future earnings visibility and certainty.
Capacity Ramp-Up: Capex Intensifies, HBM4 Accelerates to Volume
To meet seemingly insatiable demand, Micron is expanding capacity at an unprecedented pace. Micron expects Q4 capital expenditures of approximately $10 billion, full-year FY2026 capex of roughly $27 billion, and further sequential capex increases across each quarter of FY2027, with more than half of the incremental spend directed toward cleanroom and facility construction.
Micron has locked in long-term orders with ASML and is synchronizing facility construction with equipment delivery schedules to avoid idle capacity.
Specific capacity timelines:
· Idaho ID1 is projected to produce its first wafers in mid-2027, while Fab ID2 is slated to launch wafer output by the end of 2028.
· The newly acquired Tongluo facility in Taiwan, with an existing 300,000-square-foot wafer fab space, is expected to deliver meaningful product shipments by mid-2027, roughly one quarter earlier than previously guided.
· Singapore facilities are forecast to deliver substantial HBM packaging capacity contributions starting in the first half of 2027.
On the technology front, HBM4 12 high volume lamp is tracking twice as fast as HBM3E 12 high, and micron have already shipped over $1 billion in HBM4 revenue. We expect to reach mature yields on HBM4 12 high significantly faster than HBM3E 12 high. The 1γ DRAM node and G9 NAND node are both ramping smoothly and are expected to become Micron's highest-volume nodes. The next-generation HBM4E and brand-new DRAM/NAND nodes are also planned to enter volume production in the second half of 2027.
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