Micron Technology has delivered its strongest quarterly report of the fiscal year to date. The company's three key metrics—revenue, profit, and gross margin—significantly surpassed market expectations, and its guidance for the next quarter was notably higher than consensus estimates, further elevating expectations for the memory industry's recovery.
Following the earnings release, Wall Street firms initiated a wave of price target increases. Bank of America Securities raised its target to $1550 from $1500, maintaining a "Buy" rating. Investment bank Baird significantly increased its target to $1280 from $500. Financial services firm DA Davidson also raised its target to $2000, the highest on Wall Street, while keeping a "Buy" rating. Goldman Sachs lifted its target to $1100 from $900, maintaining a "Neutral" rating.
Key Drivers of the Upside Cycle
Goldman Sachs further noted that against the backdrop of continued price increases for DRAM and NAND, this quarter's results confirm the memory industry remains in an accelerating upcycle. Market focus will now shift to management's updates on the progress of 16 strategic customer agreements, the capital expenditure plan for fiscal year 2027, and further guidance on structural shifts in traditional memory demand.
Performance Exceeds Expectations Across the Board
For the third fiscal quarter ending May 2026, all three of Micron's core metrics were significantly better than market expectations.
The company reported revenue of $41.456 billion, representing substantial year-over-year growth and exceeding Wall Street consensus estimates by approximately 14%. By segment, DRAM revenue of $31.328 billion exceeded market expectations by about 11%, while NAND revenue of $9.943 billion surpassed expectations by roughly 27.9%, making it the largest source of outperformance this quarter.
Driven by both price and volume, DA Davidson pointed out that NAND bit shipments grew by a mid-single-digit percentage sequentially, with the average selling price increasing sequentially into the "low-80% range." The sequential increase in DRAM average selling price also reached the "low-60% range," indicating a significantly strengthened upward trend in memory pricing.
Profitability also greatly exceeded expectations. Non-GAAP earnings per share were $25.11, beating market expectations by about 19%. The gross margin reached 84.9%, approximately 240 basis points above consensus levels. Data from FactSet indicates that revenue, gross margin, and EPS all significantly outperformed market consensus expectations.
Upward Revision for Next Quarter Guidance
Micron's guidance for the fourth fiscal quarter further reinforces the industry's upward trajectory.
The company expects revenue in the range of $49 billion to $51 billion, with a midpoint of $50 billion. This is about 14% above the market consensus and implies sequential growth of approximately 20%. The gross margin guidance is raised to 86%, continuing to exceed market expectations by over 100 basis points. The non-GAAP EPS guidance of $30 to $32, with a midpoint of $31, is also significantly higher than market consensus by about 20%.
This guidance is notably higher than previous estimates and also significantly leads the FactSet consensus. Goldman Sachs noted that, more importantly, this guidance shows no sign of the magnitude of outperformance narrowing, suggesting the memory pricing upcycle is still ongoing.
Strategic Agreements and Capital Expenditure Plans
On the demand side, Micron signed 16 strategic long-term agreements this quarter with customers in data center, consumer electronics, and automotive sectors. These agreements have an average duration of about five years, covering approximately 20% of DRAM shipments and one-third of NAND shipments.
Most of these agreements feature a take-or-pay structure with price floors and ceilings based on prevailing market prices. The company disclosed that the minimum price terms across these agreements correspond to potential revenue of about $100 billion and expects to receive approximately $22 billion in cash prepayments to support supply chain expansion.
Concurrently, the company anticipates fourth-quarter capital expenditures to reach $10 billion for new capacity construction, emphasizing that the tight supply-demand balance in the memory market is expected to persist at least through 2027.
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