Micron Technology, Inc. (MU) | The Buildout — AI Infrastructure

The Verdict

Micron makes memory — DRAM and NAND — plus the solid-state drives and storage products built on it, sold under the Micron and Crucial brands. Its role in the AI buildout runs through two of its four business units: the Cloud Memory unit supplies HBM, the stacked DRAM that sits beside an accelerator, and the Core Data Center unit supplies server DRAM and data center SSDs. Management's framing is that memory, not logic or power, is the binding constraint on AI data centers, and that system performance is limited by memory capacity and bandwidth. Customers are hyperscale cloud operators, accelerator vendors and OEMs, alongside smartphone, PC and automotive buyers.

Earnings Beat

Fiscal Q4 2026 revenue was $54.2 billion at an 86.8% gross margin — above the $50 billion ± $1 billion and approximately 86% gross margin management had guided, and up from $11.3 billion in the year-ago quarter. The quarter followed $13.6 billion, $23.9 billion and $41.5 billion in the first three quarters of the fiscal year. Management said on the call that it signed 10 more strategic customer agreements in the quarter, taking the total to 26, and that more than 75% of fiscal 2027 shipments were already committed. Reported earnings have come in ahead of analyst estimates in seven of seven tracked quarters.

Management tone: The latest call was a Q&A-only session with no prepared remarks, led by new President and COO Manish Bhatia and new President and Chief Technology and Products Officer Scott DeBoer; CEO Sanjay Mehrotra was not on it. Management was direct on operations — clean-room constraints, capital spending composition, the HBM4E design — and deferred on two items, declining to update the HBM total addressable market outlook and declining to give specific SCA floor pricing. It acknowledged a second consecutive quarter of sequential bit declines in mobile and client and steered those questions to pricing and mix. The CFO closed by volunteering modeling details without being asked: single-digit sequential bit growth and double-digit cost increases for both DRAM and NAND in the first quarter of fiscal 2027.

Management Guidance

The last full quarterly guide was fiscal Q4 2026: revenue $50 billion ± $1 billion, gross margin approximately 86%, non-GAAP operating expenses of about $1.65 billion, with capital spending of about $10 billion and a tax rate of roughly 15%; fiscal 2026 capital spending was raised to about $27 billion, net of anticipated government incentives. On the September call management issued no new full-year framework, instead giving incremental fiscal 2027 items: quarterly capital spending above fiscal Q4 levels, with the majority of the construction increase for clean rooms online late 2028 and beyond; an R&D increase of over $1 billion excluding incentive compensation; first-quarter bit growth of single-digit sequential and cost per bit up double-digit sequential for both DRAM and NAND; and more than 75% of fiscal 2027 shipments already committed. The stated assumptions behind the margin outlook are a meaningful moderation in the rate of price increases and favorable mix.

Trajectory

Revenue has risen in each of the last four reported quarters — $13.6 billion, $23.9 billion, $41.5 billion and $54.2 billion — with gross margin going from 56.0% to 74.4% to 84.6% to 86.8%. The composition of that growth is price: in fiscal Q3, DRAM bit shipments rose only low-single-digits sequentially while DRAM average selling prices rose in the low-60% percentage range. Sequential growth is already slowing — up 73.7% in fiscal Q3 and up 30.8% in fiscal Q4 — and management guides price increases to moderate while fiscal Q1 2027 cost per bit rises double-digits for both DRAM and NAND. Mobile and client bit shipments declined sequentially for a second consecutive quarter even as that unit's revenue grew on pricing and mix.

The Model

The model projects FY+1 revenue of $280.0 billion and EBITDA of $240.8 billion (86.0%), and FY+2 revenue of $340.0 billion and EBITDA of $284.9 billion (83.8%). The near term is anchored by the contracted book — more than 75% of fiscal 2027 shipments committed before the year began, roughly $100 billion of minimum-price RPO, and new capacity that first contributes in mid-calendar 2027 through the Idaho ID1 fab, Tongluo shipments and Singapore HBM packaging. FY+2 leans on the 1-delta DRAM ramp in the second half of calendar 2027, the G9 NAND node, HBM4E volume, and SCA coverage moving toward roughly 35% of sales by 2030. The projection implies EBITDA margin easing from 86.0% to 83.8%, consistent with management's stated assumption that price increases moderate while cost per bit rises.

Projections are the median of 5 independent model runs. The model’s revenue sits 22.4% above analyst consensus.

The last full quarterly guide was fiscal Q4 2026: revenue $50 billion ± $1 billion, gross margin approximately 86%, non-GAAP operating expenses of about $1.65 billion, with capital spending of about $10 billion and a tax rate of roughly 15%; fiscal 2026 capital spending was raised to about $27 billion, net of anticipated government incentives. On the September call management issued no new full-year framework, instead giving incremental fiscal 2027 items: quarterly capital spending above fiscal Q4 levels, with the majority of the construction increase for clean rooms online late 2028 and beyond; an R&D increase of over $1 billion excluding incentive compensation; first-quarter bit growth of single-digit sequential and cost per bit up double-digit sequential for both DRAM and NAND; and more than 75% of fiscal 2027 shipments already committed. The stated assumptions behind the margin outlook are a meaningful moderation in the rate of price increases and favorable mix.

What Could Go Right — and Wrong

Looking Ahead

Over the next twelve months the tests are the SCA book and the cost curve. Management has said HBM pricing was increased significantly for calendar 2027 and resets on January 1, 2027 — deliberately narrowing HBM's profitability gap with conventional DRAM; Singapore's advanced packaging is due to begin contributing HBM packaging in the first half of calendar 2027; and first wafer output from the Idaho ID1 fab and meaningful shipments from Tongluo are both targeted for mid-calendar 2027. Against that, fiscal 2027 capital spending steps up with the majority of the construction increase producing no bits until late 2028 and beyond, the consumer end of the business is already shrinking by units, and management expects China exposure to be in the single-digit range in fiscal 2027.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

Micron sells memory and storage under its Micron and Crucial brands, and describes itself in its 10-K as 'an industry leader in innovative memory and storage solutions' with a portfolio of high-performance DRAM, NAND and NOR products. HBM — a 3D stacked DRAM architecture that uses through-silicon via connections — is housed in the Cloud Memory business unit and is called out in the 10-K as HBM for all data center customers. The rest of the portfolio runs from DDR, LPDDR and GDDR DRAM through NAND, SSDs, managed NAND, multi-chip packages and NOR. That product set is what sits directly beside the accelerator and underneath the server: memory that AI systems read from and write to, which management says is the principal constraint on data center build-outs.

Micron runs its own wafer fabrication and its own component and module assembly and test. The 10-K lists wafer fabrication in Taiwan, Singapore, the United States and Japan, with assembly and test in Taiwan, Singapore, Malaysia, China and India, and reticle manufacturing in the United States. Taiwan is the concentration that matters: a majority of 2025 DRAM production output came from Micron's fabrication facilities there, a risk the filings repeat across the 10-Q delta chain. Commercially, the company is recasting the model around multiyear Strategic Customer Agreements — take-or-pay contracts with floor and ceiling pricing bands, customer cash deposits and minimum-price remaining performance obligations — which management says it expects will fundamentally transform the business.

Business Segments

Competitive Landscape

Micron's filings name a short competitive set: Samsung Electronics, SK hynix, Kioxia, Sandisk, ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC), with the latest 10-Q deltas expressly adding Sandisk and CXMT to the list. On the demand side, NVIDIA's own filing names exactly three memory suppliers — SK Hynix, Micron and Samsung — and says it is working with all three to increase capacity. The clearest competitive nuance in the evidence is supply tightness: Sandisk says it expects bits to remain on allocation beyond calendar year 2027 and sees the NAND market approaching $500 billion of revenue in calendar 2027, while Micron's SCAs cover roughly 35% of sales by 2030. Management's technology claim is that its leadership is 'at least 2 nodes ahead of the China competition.'

Supply Chain

Micron sits between equipment and materials suppliers — ASML, Applied Materials, Rambus, Silicon Motion and Idaho Power among those named — and accelerator, cloud and automotive customers including NVIDIA, AMD, Alphabet and General Motors. Several of those neighbors mention Micron by name in their own filings and calls.