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Micron's Stellar Q3 Earnings Ensure More Upside to Its Meteoric Rise
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Key Takeaways
Micron posted Q3 EPS of $25.11 and revenue of $41.46 billion, beating estimates by wide margins.
MU benefited from AI-driven demand, with HBM shortages helping boost pricing and margins.
MU forecast Q4 revenue of $50 billion and adjusted EPS of $31.00, above consensus estimates.
On June 24, Micron Technology Inc. (MU - Free Report) posted blockbuster third-quarter fiscal 2026 earnings results, crushing all estimates. The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to memory and storage devices.
Micron has been benefiting tremendously from the enormous application of AI in day-to-day life, which has pushed up the demand for memory chips. The four major hyperscalers raised their AI capital expenditure budget to $750 billion for 2026. This figure is set to cross $1 trillion next year and is likely to rise further beyond 2027.
This has resulted in more AI semiconductor sales implying the need for multiple AI memory chips to operate. Flash memory technologies like DRAM and NAND are used in AI chips, enabling them to perform optimally.
This has pushed up the demand for AI-enabled memory chips. In their last earnings reports, all four major hyperscalers highlighted a shortage of memory and storage chips, resulting in soaring prices of these products. As a result, MU benefits significantly.
The chart below shows the price performance of MU year to date.
Image Source: Zacks Investment Research
Q3 Results Crush All Estimates
Quarterly adjusted earnings per share of $25.11 per share easily surpassed the Zacks Consensus Estimate of $20.98. This marked a year-over-year jump of an astonishing 1,215%. Quarterly, revenues of $41.46 billion, breezed past the Zacks Consensus Estimate of $36.52 billion, reflecting a massive 345.8% rise year over year.
Gross margin climbed to 84.9% in the third quarter from 74.9% in the prior quarter and 39% in the year-ago period. This proved how high-bandwidth memory (HBM) shortage is helping these high-end memory developers to increase prices in a world of AI-powered data center boom. Operating cash flow ballooned up to $25.39 billion, up 113.4% sequentially.
Micron’s CEO Sanjay Mehrotra, said, “Our customers are recognizing that supply shortages in memory and storage will take considerable time to improve, even as we expect industry supply to improve gradually in 2028.”
New Tech Trends to Drive MU’s Prospects
The performance of any AI model depends on memory performance and capacity. MU’s HBM is a highly sought-after product for NVIDIA Corp. (NVDA - Free Report) , Advanced Micro Devices Inc. (AMD - Free Report) and Alphabet Inc. (GOOGL - Free Report) to name a few, for their AI-enabled chipsets.
Micron has meaningful exposure to AI, cloud data centers, industrial IoT and autonomous vehicles, all of which require increasingly advanced memory solutions. As AI adoption accelerates, demand for DRAM and NAND products continues to rise.
MU has invested heavily in next-generation memory technologies, positioning itself to meet the growing performance and efficiency requirements of AI systems. A particularly important growth driver is HBM, which has become essential for advanced AI workloads. Micron Technology’s HBM3E and HBM4 products are seeing exceptionally strong demand because they offer the speed and efficiency required by modern AI systems.
MU’s position in the AI ecosystem continues to strengthen. NVIDIA identified Micron as a key HBM supplier for its GeForce RTX 50 Blackwell GPUs, reinforcing its importance within the AI supply chain. Demand for HBM4 is also benefiting from next-generation AI infrastructure deployments, including NVIDIA’s Vera Rubin platform.
Strong Guidance
Micron anticipates revenues of $50 billion (+/1 billion) in the fiscal fourth quarter of 2026, well above the current Zacks Consensus Estimate of $42.64 billion. MU projects a non-GAAP gross margin of approximately 86%.
Operating expenses on a non-GAAP basis are estimated to be approximately $1.65 billion. Adjusted EPS is anticipated to be $31.00 (+/- $1.00), significantly above the current Zacks Consensus Estimate of $24.91.
Despite a robust rally, the MU stock still looks attractive. It trades at a forward 12-month price-to-earnings multiple of 16.88, which is significantly lower than the industry average of 28.68. This discount adds to the appeal for long-term investors.
Micron Technologies represents an opportunity to invest in a company with substantial unrealized potential in the AI revolution. Astonishing growth potential of the global AI-powered data centers and MU’s strong guidance and business visibility are noteworthy.
View the Zacks #1 Rank List
Image: Shutterstock
Micron's Stellar Q3 Earnings Ensure More Upside to Its Meteoric Rise
Key Takeaways
On June 24, Micron Technology Inc. (MU - Free Report) posted blockbuster third-quarter fiscal 2026 earnings results, crushing all estimates. The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to memory and storage devices.
Micron has been benefiting tremendously from the enormous application of AI in day-to-day life, which has pushed up the demand for memory chips. The four major hyperscalers raised their AI capital expenditure budget to $750 billion for 2026. This figure is set to cross $1 trillion next year and is likely to rise further beyond 2027.
This has resulted in more AI semiconductor sales implying the need for multiple AI memory chips to operate. Flash memory technologies like DRAM and NAND are used in AI chips, enabling them to perform optimally.
This has pushed up the demand for AI-enabled memory chips. In their last earnings reports, all four major hyperscalers highlighted a shortage of memory and storage chips, resulting in soaring prices of these products. As a result, MU benefits significantly.
The chart below shows the price performance of MU year to date.
Image Source: Zacks Investment Research
Q3 Results Crush All Estimates
Quarterly adjusted earnings per share of $25.11 per share easily surpassed the Zacks Consensus Estimate of $20.98. This marked a year-over-year jump of an astonishing 1,215%. Quarterly, revenues of $41.46 billion, breezed past the Zacks Consensus Estimate of $36.52 billion, reflecting a massive 345.8% rise year over year.
Gross margin climbed to 84.9% in the third quarter from 74.9% in the prior quarter and 39% in the year-ago period. This proved how high-bandwidth memory (HBM) shortage is helping these high-end memory developers to increase prices in a world of AI-powered data center boom. Operating cash flow ballooned up to $25.39 billion, up 113.4% sequentially.
Micron’s CEO Sanjay Mehrotra, said, “Our customers are recognizing that supply shortages in memory and storage will take considerable time to improve, even as we expect industry supply to improve gradually in 2028.”
New Tech Trends to Drive MU’s Prospects
The performance of any AI model depends on memory performance and capacity. MU’s HBM is a highly sought-after product for NVIDIA Corp. (NVDA - Free Report) , Advanced Micro Devices Inc. (AMD - Free Report) and Alphabet Inc. (GOOGL - Free Report) to name a few, for their AI-enabled chipsets.
Micron has meaningful exposure to AI, cloud data centers, industrial IoT and autonomous vehicles, all of which require increasingly advanced memory solutions. As AI adoption accelerates, demand for DRAM and NAND products continues to rise.
MU has invested heavily in next-generation memory technologies, positioning itself to meet the growing performance and efficiency requirements of AI systems. A particularly important growth driver is HBM, which has become essential for advanced AI workloads. Micron Technology’s HBM3E and HBM4 products are seeing exceptionally strong demand because they offer the speed and efficiency required by modern AI systems.
MU’s position in the AI ecosystem continues to strengthen. NVIDIA identified Micron as a key HBM supplier for its GeForce RTX 50 Blackwell GPUs, reinforcing its importance within the AI supply chain. Demand for HBM4 is also benefiting from next-generation AI infrastructure deployments, including NVIDIA’s Vera Rubin platform.
Strong Guidance
Micron anticipates revenues of $50 billion (+/1 billion) in the fiscal fourth quarter of 2026, well above the current Zacks Consensus Estimate of $42.64 billion. MU projects a non-GAAP gross margin of approximately 86%.
Operating expenses on a non-GAAP basis are estimated to be approximately $1.65 billion. Adjusted EPS is anticipated to be $31.00 (+/- $1.00), significantly above the current Zacks Consensus Estimate of $24.91.
Image Source: Zacks Investment Research
Investment Thesis
Micron currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Despite a robust rally, the MU stock still looks attractive. It trades at a forward 12-month price-to-earnings multiple of 16.88, which is significantly lower than the industry average of 28.68. This discount adds to the appeal for long-term investors.
Micron Technologies represents an opportunity to invest in a company with substantial unrealized potential in the AI revolution. Astonishing growth potential of the global AI-powered data centers and MU’s strong guidance and business visibility are noteworthy.
Image Source: Zacks Investment Research