Micron Q4 Earnings Beat Estimates on Strong Pricing and AI Demand
Micron Technology, Inc. MU reported fourth-quarter fiscal 2026 non-GAAP earnings of $33.42 per share, up more than 11-fold from $3.03 in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate by 5.73%. Strong pricing and AI-led memory and storage aided the robust bottom-line growth. Tight DRAM and NAND conditions lifted pricing, while AI demand supported data center growth.
Revenues surged 379.3% year over year to $54.23 billion and topped the Zacks Consensus Estimate by 6.33%. Data center SSD revenues approached $10 billion, more than 10 times the year-ago level and more than two-thirds of total NAND revenues.
MU’s Q4 Technology Mix Reflects Pricing Strength
DRAM revenues reached a record $39.77 billion, representing 73% of total revenues. DRAM revenues rose 27% sequentially as bit shipments increased in the mid-single-digit percentage range and average selling prices advanced in the high-teens percentage range.
NAND revenues were a record $14.10 billion, accounting for 26% of revenues. The figure increased 42% sequentially, with bit shipments up approximately 10% and average selling prices rising approximately 30%.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote
Micron’s Business Units Post Record Revenues
Cloud Memory Business Unit revenues were a record $16.28 billion, up 18% sequentially. Core Data Center Business Unit revenues climbed 56% to a record $18.00 billion, supported by higher pricing and bit shipments.
Mobile and Client Business Unit revenues rose 14% sequentially to a record $13.11 billion, while Automotive and Embedded Business Unit (“AEBU”) revenues increased 47% to a record $6.82 billion. Higher pricing supported both businesses, with AEBU also benefiting from higher bit shipments.
MU’s Margins Expand Despite Higher Compensation
Non-GAAP gross margin was 87%, up from 84.9% in the fiscal third quarter, driven primarily by higher pricing and strong execution, partly offset by mix. Non-GAAP operating income reached $44.64 billion, producing an 82.3% operating margin.
Non-GAAP operating expenses rose to $2.57 billion from $1.52 billion sequentially. Management attributed the increase mainly to higher incentive compensation for employees and a $300 million contribution to community investments.
Micron’s SCAs Extend Revenue Visibility
Micron has signed 26 strategic customer agreements, or SCAs, representing an estimated more than 35% of revenues through 2030. Three-quarters of those expected revenues have a defined pricing framework, while customer financial commitments under signed agreements and extensions reached $32 billion.
Remaining performance obligations tied to SCAs with determined pricing were approximately $150 billion. Management also said more than 75% of 2027 output is already committed across SCA and non-SCA customers, while agreements cover the vast majority of calendar year 2027 HBM bit supply at significantly higher year-over-year prices.
MU’s Cash Flow and Balance Sheet Strengthen
Operating cash flow totaled $43.97 billion in the quarter. Net capital expenditures were $10.77 billion, resulting in adjusted free cash flow of $33.20 billion. In full fiscal 2026, the company generated operating and free cash flow of $89.68 billion and $62.31 billion.
Micron ended fiscal 2026 with $73.48 billion in cash, marketable investments and restricted cash. Debt stood at about $5.2 billion, leaving net cash of $68.30 billion. Customer cash deposits associated with SCAs totaled $12.7 billion at quarter-end.
Micron’s Q1 Fiscal 2027 Outlook Stays Strong
For the first quarter of fiscal 2027, Micron expects revenues of $61.5 billion, plus or minus $1.5 billion. Non-GAAP gross margin is projected at approximately 86.25%, operating expenses at about $2.06 billion and earnings at $38.15 per share, plus or minus $1.
Management expects fiscal 2027 to be another record year, with sequential revenue growth each quarter. It sees first-quarter gross margin as the floor for the year and projects fiscal 2027 operating expenses to increase by approximately $2.5 billion, mainly due to higher R&D and incentive compensation.
MU’s Market Outlook Points to Tight Supply
Micron expects memory and storage supply-demand conditions to be much tighter in calendar years 2027 and 2028 than in 2026. Industry DRAM bit shipments are projected to grow in the low-20s percentage range in both years, while NAND bit shipments are expected to increase in the mid-20s percentage range, with both markets remaining supply-constrained.
Micron expects industry HBM bit shipments to grow faster than conventional DRAM through calendar year 2028. MU plans higher fiscal 2027 capital spending than previously contemplated, with most of the increase directed to construction aimed at accelerating cleanroom availability in late calendar year 2028 and beyond.
MU’s Zacks Rank and Stocks to Consider
Micron currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the broader Zacks Computer and Technology sector are NVIDIA NVDA, Hewlett Packard Enterprise HPE and FormFactor FORM. At present, NVIDIA, Hewlett Packard Enterprise and FormFactor each sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings is pegged at $9.25 per share, up a penny over the past 30 days, indicating a year-over-year rise of 93.9%. NVIDIA shares have gained 22.5% YTD.
The Zacks Consensus Estimate for Hewlett Packard Enterprise’s fiscal 2026 earnings has moved northward by 10.4% to $3.81 per share over the past 30 days and calls for a year-over-year increase of 96.4%. Hewlett Packard Enterprise shares have jumped 166% YTD.
The Zacks Consensus Estimate for FormFactor’s 2026 earnings has been revised upward by 11 cents to $3.05 per share over the past 60 days, implying a year-over-year surge of 134.6%. FormFactor shares have soared 167.7% YTD.
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