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Will Micron's Gross Margin Expand Further With Higher Memory Pricing?
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Key Takeaways
Micron Technology posted a record 74.9% non-GAAP gross margin in Q2'26, driven by increased memory pricing.
Micron Technology's revenues rose to $23.86B, up 196% YoY and 75% QoQ on higher memory demand and pricing.
MU expects gross margin to reach 81% in Q3 as strong AI-led demand and tight supply continue to fuel prices.
Micron Technology, Inc. (MU - Free Report) is benefiting from one of the strongest pricing environments the memory industry has seen in years. Higher DRAM and NAND prices, fueled by artificial intelligence (AI)-driven demand and limited supply, are pushing the company’s margins to multi-year highs.
In the second quarter of fiscal 2026, Micron Technology reported revenues of $23.86 billion, up 196% year over year and 75% sequentially. The company’s non-GAAP gross margin also improved sharply as stronger pricing and a richer product mix boosted profitability. The fiscal second-quarter non-GAAP gross margin reached an all-time high of 74.9%, improving from the year-ago quarter’s 37.9% and the previous quarter’s 56.8%. Demand for high-bandwidth memory (HBM), server DRAM and enterprise SSDs played a major role in this improvement.
AI servers are becoming a major growth engine for the memory market. These systems require far more memory capacity and bandwidth than traditional servers, increasing DRAM and NAND content per machine. As hyperscalers continue investing heavily in AI infrastructure, Micron Technology is benefiting from strong pricing power across its memory portfolio.
Supply conditions are also helping. Industry capacity remains tight, and new fabs will take years to ramp up meaningfully. This supply-demand imbalance is supporting higher average selling prices, which directly improves Micron Technology’s margins because memory manufacturing carries high fixed costs.
Overall, strong memory pricing and AI-led demand trends suggest MU’s margin momentum may continue in the near future. For the third quarter of fiscal 2026, Micron Technology projects a non-GAAP gross margin of approximately 81%, indicating a robust expansion from the year-ago quarter’s level of 39%.
Micron Peers Also Benefit From Strong Margin Trends
NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) are two major U.S.-listed semiconductor companies also benefiting from the AI boom, though their business models differ from Micron Technology.
NVIDIA continues to lead the AI accelerator market, with data center revenues growing 92% year over year in the recently reported first-quarter fiscal 2027 results. The company’s non-GAAP gross margin reached 75% from 60.8% in the year-ago quarter, supported by strong pricing power for its AI GPUs and networking products. NVIDIA’s growth indirectly benefits Micron Technology because AI servers using NVIDIA chips require large amounts of DRAM and HBM memory.
Advanced Micro Devices is also gaining momentum in AI and data center markets. Its EPYC server processors and Instinct AI accelerators are helping expand enterprise adoption. AMD’s data center revenues surged 57% year over year to a record $5.78 billion in the first quarter of 2026, while non-GAAP gross margins expanded 180 basis points to 55.4%. As AI server deployments rise, Advanced Micro Devices’ growth is increasing demand for advanced memory and storage products supplied by Micron Technology.
Micron’s Price Performance, Valuation and Estimates
Shares of Micron Technology have surged around 225.3% year to date compared with the Zacks Computer and Technology sector’s return of 19.4%.
Micron Technology YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MU trades at a forward price-to-earnings ratio of 10.37, significantly lower than the sector’s average of 26.02.
Micron Technology 12-Month Forward P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 and 2027 earnings implies a year-over-year increase of 611% and 70.2%, respectively. Bottom-line estimates for fiscal 2026 and 2027 have been revised upward in the past 30 days.
View the Zacks #1 Rank List
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Will Micron's Gross Margin Expand Further With Higher Memory Pricing?
Key Takeaways
Micron Technology, Inc. (MU - Free Report) is benefiting from one of the strongest pricing environments the memory industry has seen in years. Higher DRAM and NAND prices, fueled by artificial intelligence (AI)-driven demand and limited supply, are pushing the company’s margins to multi-year highs.
In the second quarter of fiscal 2026, Micron Technology reported revenues of $23.86 billion, up 196% year over year and 75% sequentially. The company’s non-GAAP gross margin also improved sharply as stronger pricing and a richer product mix boosted profitability. The fiscal second-quarter non-GAAP gross margin reached an all-time high of 74.9%, improving from the year-ago quarter’s 37.9% and the previous quarter’s 56.8%. Demand for high-bandwidth memory (HBM), server DRAM and enterprise SSDs played a major role in this improvement.
AI servers are becoming a major growth engine for the memory market. These systems require far more memory capacity and bandwidth than traditional servers, increasing DRAM and NAND content per machine. As hyperscalers continue investing heavily in AI infrastructure, Micron Technology is benefiting from strong pricing power across its memory portfolio.
Supply conditions are also helping. Industry capacity remains tight, and new fabs will take years to ramp up meaningfully. This supply-demand imbalance is supporting higher average selling prices, which directly improves Micron Technology’s margins because memory manufacturing carries high fixed costs.
Overall, strong memory pricing and AI-led demand trends suggest MU’s margin momentum may continue in the near future. For the third quarter of fiscal 2026, Micron Technology projects a non-GAAP gross margin of approximately 81%, indicating a robust expansion from the year-ago quarter’s level of 39%.
Micron Peers Also Benefit From Strong Margin Trends
NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) are two major U.S.-listed semiconductor companies also benefiting from the AI boom, though their business models differ from Micron Technology.
NVIDIA continues to lead the AI accelerator market, with data center revenues growing 92% year over year in the recently reported first-quarter fiscal 2027 results. The company’s non-GAAP gross margin reached 75% from 60.8% in the year-ago quarter, supported by strong pricing power for its AI GPUs and networking products. NVIDIA’s growth indirectly benefits Micron Technology because AI servers using NVIDIA chips require large amounts of DRAM and HBM memory.
Advanced Micro Devices is also gaining momentum in AI and data center markets. Its EPYC server processors and Instinct AI accelerators are helping expand enterprise adoption. AMD’s data center revenues surged 57% year over year to a record $5.78 billion in the first quarter of 2026, while non-GAAP gross margins expanded 180 basis points to 55.4%. As AI server deployments rise, Advanced Micro Devices’ growth is increasing demand for advanced memory and storage products supplied by Micron Technology.
Micron’s Price Performance, Valuation and Estimates
Shares of Micron Technology have surged around 225.3% year to date compared with the Zacks Computer and Technology sector’s return of 19.4%.
Micron Technology YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MU trades at a forward price-to-earnings ratio of 10.37, significantly lower than the sector’s average of 26.02.
Micron Technology 12-Month Forward P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 and 2027 earnings implies a year-over-year increase of 611% and 70.2%, respectively. Bottom-line estimates for fiscal 2026 and 2027 have been revised upward in the past 30 days.
Image Source: Zacks Investment Research
Micron Technology currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.