Micron's 84.9% gross margin now exceeds Meta and Nvidia, reflecting unprecedented pricing power in a structurally constrained memory market. Management locked in $22 billion in multi-year customer commitments and expects supply-demand tightness to persist beyond 2027.
Key Numbers
What happened
Micron reported fiscal Q3 revenue of $41.46 billion (up 346% year-over-year), crushing the $35.84 billion consensus. Adjusted EPS of $25.11 beat expectations of $20.78. Gross margin surged to 84.9% from 39% a year earlier, now the highest among major U.S. tech companies.
Data center revenue jumped 653% to $11.5 billion; cloud memory climbed 306% to $13.77 billion. Management guided Q4 revenue to $50 billion versus Street estimates of $43.58 billion.
CEO Sanjay Mehrotra announced 16 multi-year supply agreements totaling $22 billion in committed volume, covering half or more of future revenue. He stated supply-demand conditions for DRAM and NAND will remain tight beyond calendar 2027. Operating cash flow reached $25.4 billion (up 451%), and free cash flow hit $18.3 billion (up 839%).
What to watch
Q4 fiscal 2026 results expected to show further margin expansion to 86% and EPS of $31.00
2028 supply outlook: management indicated conditions may begin improving in calendar 2028
Customer contract closures: deals with data center operators and automakers represent binding volume commitments over 3-5 years
Shareholder return plans: management stated intent to return 100% of excess cash to shareholders over time
Also Worth Watching
Nvidia's AI accelerators depend entirely on high-bandwidth memory from suppliers like Micron. Extended memory supply constraints raise questions about whether GPU shipment timelines face bottlenecks, even as Nvidia's own capacity remains flush. Historically, memory shortages have forced AI hardware makers to prioritize customers willing to lock in long-term contracts. NVDA (NVIDIA Corporation $200.92 (+0.4%) - )
Company Overview
Micron Technology manufactures memory and storage chips used in data centers, mobile devices, computers, and automotive systems. The company generates revenue by selling DRAM and NAND flash memory products to customers in cloud computing, AI infrastructure, consumer electronics, and industrial markets.
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