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Micron's HBM4 Ramp-Up: Can Higher Pricing Lift Margins Further?
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Key Takeaways
Micron's HBM4 ramp-up and higher contract prices could lift margins further amid robust AI memory demand.
MU's Q4'26 gross margin hit 87%, while HBM4 production is ramping twice as fast as HBM3E.
Micron secured most 2027 HBM supply deals at higher prices, potentially narrowing the margin gap with DRAM.
Micron Technology, Inc. (MU - Free Report) is positioned to benefit from the rising demand for high-bandwidth memory (HBM) as AI companies build more powerful data centers. Its HBM4 ramp-up could support further margin growth if strong demand, higher prices and efficient production continue.
Micron’s fourth-quarter 2026 revenues jumped 379.3% year over year to $54.23 billion, while the full fiscal 2026 top line surged 256.3% to $133.19 billion. The fourth-quarter non-GAAP gross margin reached 87%, up from 45.7% in the year-ago quarter. The company’s full fiscal 2026 gross margin reached 81.1% from 41.1% in fiscal 2025, highlighting the benefits of favorable memory pricing and strong demand.
HBM is an important part of this opportunity. Micron reported that HBM revenues grew faster than total company revenues in the fourth quarter. It has also completed agreements covering most of its HBM bit supply for calendar year 2027, with significantly higher prices than the previous year. These agreements offer better revenue visibility and could help support profitability as shipments increase.
Micron’s HBM4 progress adds another growth opportunity. The company said its 12-high HBM4 production ramp-up is advancing twice as fast as the comparable HBM3E generation, and it has already shipped more than $1 billion in HBM4 revenues. Faster production growth and better manufacturing yields could help reduce costs and improve returns as volumes rise.
Pricing is another potential margin driver. Micron has secured most of its 2027 HBM supply agreements at significantly higher year-over-year prices. Management expects these prices to narrow the gross-margin gap between HBM and conventional DRAM. However, the actual benefit will depend on production costs, product yields and how quickly shipments increase.
Micron’s HBM4 ramp-up and higher contract prices provide a strong foundation for further margin improvement. Its 87% fourth-quarter gross margin already reflects favorable market conditions, but sustaining such high levels will depend on execution and continued AI spending. For the first quarter of fiscal 2027, Micron expects non-GAAP gross margin of approximately 86.25%.
How Do Rivals Fare Against Micron in AI Memory Space?
Micron’s major competitors, SK hynix (SKHY - Free Report) and Sandisk Corporation (SNDK - Free Report) , are also benefiting from AI-led demand for memory and storage solutions.
SK hynix is one of Micron’s closest DRAM rivals and has a strong position in HBM, which is critical for AI accelerators. In the second quarter of 2026, SK hynix generated 79.3 trillion Korean won in revenues, up 257% year over year, while operating profit surged 557% to 60.5 trillion won. HBM, AI-server DRAM and enterprise SSDs drove the strong results.
Sandisk is more focused on NAND and storage than DRAM, but it is another stock that stands to benefit from AI infrastructure spending. Its fiscal 2026 revenues jumped 175% to $20.25 billion, while data-center revenues soared 437% to $5.15 billion. Sandisk’s fourth-quarter fiscal 2026 revenues also surged 372% sequentially to $8.97 billion, showing strong demand for storage products used in data centers.
Both companies highlight the broadening AI-driven demand for memory and storage, although Micron remains particularly well-positioned in DRAM and HBM.
Micron’s Price Performance, Valuation & Estimates
Shares of Micron have surged 246.5% year to date compared with the Zacks Computer and Technology sector’s return of 23.4%.
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 5.47, significantly lower than the sector’s average of 20.93.
Micron Technology 12-Month Forward P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Micron’s fiscal 2027 and 2028 earnings implies year-over-year increases of 133.9% and 20.6%, respectively. Bottom-line estimates for fiscal 2027 and 2028 have been revised upward over the past 30 days.
View the Zacks #1 Rank List
Image: Shutterstock
Micron's HBM4 Ramp-Up: Can Higher Pricing Lift Margins Further?
Key Takeaways
Micron Technology, Inc. (MU - Free Report) is positioned to benefit from the rising demand for high-bandwidth memory (HBM) as AI companies build more powerful data centers. Its HBM4 ramp-up could support further margin growth if strong demand, higher prices and efficient production continue.
Micron’s fourth-quarter 2026 revenues jumped 379.3% year over year to $54.23 billion, while the full fiscal 2026 top line surged 256.3% to $133.19 billion. The fourth-quarter non-GAAP gross margin reached 87%, up from 45.7% in the year-ago quarter. The company’s full fiscal 2026 gross margin reached 81.1% from 41.1% in fiscal 2025, highlighting the benefits of favorable memory pricing and strong demand.
HBM is an important part of this opportunity. Micron reported that HBM revenues grew faster than total company revenues in the fourth quarter. It has also completed agreements covering most of its HBM bit supply for calendar year 2027, with significantly higher prices than the previous year. These agreements offer better revenue visibility and could help support profitability as shipments increase.
Micron’s HBM4 progress adds another growth opportunity. The company said its 12-high HBM4 production ramp-up is advancing twice as fast as the comparable HBM3E generation, and it has already shipped more than $1 billion in HBM4 revenues. Faster production growth and better manufacturing yields could help reduce costs and improve returns as volumes rise.
Pricing is another potential margin driver. Micron has secured most of its 2027 HBM supply agreements at significantly higher year-over-year prices. Management expects these prices to narrow the gross-margin gap between HBM and conventional DRAM. However, the actual benefit will depend on production costs, product yields and how quickly shipments increase.
Micron’s HBM4 ramp-up and higher contract prices provide a strong foundation for further margin improvement. Its 87% fourth-quarter gross margin already reflects favorable market conditions, but sustaining such high levels will depend on execution and continued AI spending. For the first quarter of fiscal 2027, Micron expects non-GAAP gross margin of approximately 86.25%.
How Do Rivals Fare Against Micron in AI Memory Space?
Micron’s major competitors, SK hynix (SKHY - Free Report) and Sandisk Corporation (SNDK - Free Report) , are also benefiting from AI-led demand for memory and storage solutions.
SK hynix is one of Micron’s closest DRAM rivals and has a strong position in HBM, which is critical for AI accelerators. In the second quarter of 2026, SK hynix generated 79.3 trillion Korean won in revenues, up 257% year over year, while operating profit surged 557% to 60.5 trillion won. HBM, AI-server DRAM and enterprise SSDs drove the strong results.
Sandisk is more focused on NAND and storage than DRAM, but it is another stock that stands to benefit from AI infrastructure spending. Its fiscal 2026 revenues jumped 175% to $20.25 billion, while data-center revenues soared 437% to $5.15 billion. Sandisk’s fourth-quarter fiscal 2026 revenues also surged 372% sequentially to $8.97 billion, showing strong demand for storage products used in data centers.
Both companies highlight the broadening AI-driven demand for memory and storage, although Micron remains particularly well-positioned in DRAM and HBM.
Micron’s Price Performance, Valuation & Estimates
Shares of Micron have surged 246.5% year to date compared with the Zacks Computer and Technology sector’s return of 23.4%.
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 5.47, significantly lower than the sector’s average of 20.93.
Micron Technology 12-Month Forward P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Micron’s fiscal 2027 and 2028 earnings implies year-over-year increases of 133.9% and 20.6%, respectively. Bottom-line estimates for fiscal 2027 and 2028 have been revised upward over the past 30 days.
Image Source: Zacks Investment Research
Micron currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.