Micron Beats
Micron reports Q3 earnings, guides Q4 revenue to a record $50B, and raises CY26 server unit growth outlook to high-teens percent
Guides fiscal Q4 revenue to a record $50B ±$1B, gross margin ~86%, opex ~$1.65B, EPS “record” $3.10 ±$1 on ~1.15B shares; Q4 gross margin assumes a “meaningful moderation” in the rate of price increases. - Guides fiscal Q4 CapEx ~$10B, bringing FY26 CapEx to ~$27B; expects FY27 quarterly CapEx above fiscal Q4 levels, with over half of the FY27 y/y increase from construction CapEx.
Free cash flow expected to “increase substantially again” in fiscal Q4. - FY27 opex expected to rise by ~$1B as Micron expands R&D for memory/storage opportunities, with increases weighted to 2H FY27; tax rate expected around 15% for fiscal Q4 and FY26. - DRAM and NAND demand “continues to significantly exceed industry supply”; management now expects tight supply-demand conditions to persist beyond calendar 2027, with only gradual supply improvement in 2028 and “no line of sight” to when supply catches up with demand. - Raises CY26 server unit growth outlook to high-teens percent from prior low-double-digits, driven by mid-teens traditional server growth and stronger AI-accelerator server growth; noted customers are reducing average server DRAM content growth modestly to maximize unit shipments amid tight memory allocation. - CY26 industry DRAM bit shipments expected to grow low- to mid-20% range, slightly above prior outlook; NAND bit shipment growth remains ~20%.
Micron expects its DRAM supply growth roughly in line with industry, while NAND supply grows somewhat below industry. - 16 strategic customer agreements signed, typically five-year CY26–2030 terms; cover ~20% of DRAM volume and ~1/3 of NAND volume signed so far, or ~25% of revenue over the term.
When all planned SCAs are executed, Micron expects ~50%+ of company revenue under SCAs. - 14 of 16 SCAs carry ~$100B of minimum contracted revenue/RPO over the remaining term, but management emphasized actual revenue should “well exceed” RPO; floor-price gross margins are expected to be well above any prior cycle peak, and agreements with fixed pricing or ceilings near current CQ2 levels are expected to represent ~40% of revenue when all planned SCAs are complete. - SCAs include ~$22B of deposits/financial commitments, including ~$18B cash deposits; ~$10B cash expected in fiscal Q4.
Deposits are unrestricted financing cash flows, not FCF, and are returned mostly in the back half of agreement terms. - HBM4 already generated >$1B in revenue; HBM4 12-high ramp is tracking twice as fast as HBM3E 12-high, with mature yields expected significantly faster.
Micron is strategically targeting HBM share near its DRAM share to avoid over-consuming wafers and starving non-HBM markets. - Capacity roadmap remains supply-constrained but progressing: Idaho ID1 first wafer output targeted mid-CY27, ID2 late-CY28; Taiwan Congluo existing fab now expected to ship meaningfully in mid-CY27, about one quarter earlier than prior expectations; Singapore advanced packaging to contribute meaningfully to HBM packaging capacity in 1H CY27. - Guidance excludes any impact from trade or geopolitical developments; Micron intends to increase capital returns after Dec.
9, 2026, and over time expects to return 100% of excess cash to shareholders.