Micron Technology, Inc. (MU) reported the most important quarterly earnings last week in its 47-year-long history. And the market's reaction wasn't anything else, other than confusion. The day after the earnings, Micron's stock skyrocketed 15.7%, reaching its all-time high of $1,255/share, and in the following days, the stock gave up some of the earlier gains. Today, Micron trades at $1,030/share. Despite the volatility, year-to-date Micron is still up 260%, and in the last 12 months the stock is up 7x.
The post-earnings price action would normally suggest we've hit the top, and the growth story is over. Today, I'll argue otherwise. The market is nervous, and it doesn't come as a surprise, given the massive CapEx spending behind the memory chip rally.
I've covered Micron last time in May, when the stock price was ≈$750/share. Back then I claimed that despite the massive rally, Micron's stock isn't expensive, with forward growth doing all the heavy lifting. Given the high cyclicality of memory stocks, I've hinted at having a potential exit strategy by 2027 or the beginning of 2028. In respect to valuation, I was right, though, with the exit strategy, I may have been too cautious. Let's revisit this today.
Micron's Most Important Quarter Ever
That's right. Q3 FY26 has proven to be Micron's most important earnings ever reported. In Q3, Micron's revenue has set a record at $41.5B, up 346% year-over-year. Quarter-over-quarter revenue is up 74%. Analyst consensus was $35.8B; talk about a beat... Non-GAAP EPS was $25.11 vs. the expectation of $20.7. Year-over-year, that's a growth of 13x. Non-GAAP gross margin hit an extreme 84.9%. A year ago, gross margin was 39%. I recommend reading it again. This quarter wasn't an incremental improvement compared to last year, but it was a massive leap and improvement of fundamentals year-over-year. Micron today is a different business. This growth trajectory follows a similar story to Nvidia (NVDA), which played out in the last 2-3 years. And, don't forget, in 2023, Micron reported a -$5.8B loss when the memory cycle hit rock bottom.
As you would expect, the main growth engine is the build-out of AI data centers, where memory chips are playing an increasingly more important role as we are entering the #2 phase of AI buildout focused on Agentic AI. During the quarter, Micron's core data center revenue grew 7x to $11.5B, and cloud memory grew 4x to $13.8B. The firm sold $5B worth of data center SSD. Even the most boring sectors, like embedded applications and automotive, grew steeply thanks to the limited supply and extreme price of memory chips. Consumers can expect the next-gen Apple (AAPL) MacBooks, iPads, and iPhones to come at a higher price, as well as new vehicles, given how inflated the prices of memory chips are.
SanDisk (SNDK) stock prices, remained in buoyant fashion with AI growth assured.
The same could not be said for US Commerce Dept’s Trade Balance report for May 2026.
On 07 Jul 2026, report revealed that US goods & services trade deficit surged by +42.2% to $77.6 billion vs market consensus of -$78.3 billion vs April 2026’s -$54.6 billion,
This is the widest gap since March 2025 and ‘caused’ by:
Imports rising by +3.3% to $395.3 billion.
Exports falling by -3.2% to $317.7 billion.
May Report Drill down & Highlights:
Goods Deficit: Widened sharply to $106.5 billion, the highest since March 2025.
Services Surplus: Grew slightly to $28.9 billion.
Imports: Increase was driven heavily by (i) consumer goods, (ii) industrial supplies, and investments in AI hardware.
Exports fell largely due to a steep decline in (a) export of non-
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