Micron Technology reported record results for fiscal fourth quarter 2026, with revenue and next-quarter guidance both topping market expectations. The company also said AI-driven memory demand is still strengthening and expects supply-demand conditions in DRAM and NAND to be tighter in 2027 and 2028 than in 2026.
Record fiscal Q4 results and stronger-than-expected Q1 guidance
For the fiscal fourth quarter ended Sept. 3, Micron posted revenue of $54.229 billion, up 31% quarter over quarter and 379% year over year, above the market expectation of $51.49 billion. On a non-GAAP basis, net income was $38.398 billion, adjusted earnings per share came in at $33.42, and gross margin reached 87.0%, up 2.1 percentage points from the previous quarter.
For fiscal first quarter 2027, Micron forecast revenue of $61.5 billion, plus or minus $1.5 billion, versus a market estimate of $57.02 billion. The company guided for non-GAAP adjusted EPS of $38.15, plus or minus $1, compared with a market expectation of $35.40. The midpoint of both figures was above Wall Street estimates.
After the earnings release, Micron shares rose briefly in after-hours trading before pulling back. Morgan Stanley said the market focus is shifting from 「How high can the cycle go?」 to 「How long can this level of strength last?」
Gross margin outlook missed expectations
Micron said gross margin for fiscal first quarter 2027 is expected to be about 86.25%, below the 87% posted in the fourth quarter and below the analyst expectation of 86.7%. CFO Mark Murphy said the first fiscal quarter is expected to be the low point for gross margin in fiscal 2027.
Management said gross margin should continue to improve through the rest of the fiscal year, although the pace of price increases is expected to become more moderate.
Data center revenue rose to 33% of total sales
AI data center demand remained the main growth driver in the quarter. Core data center revenue reached $18.002 billion, up 56% from the prior quarter, accounting for 33% of total company revenue. Gross margin in that segment was 90%, up 2.9 percentage points from the previous quarter.
Cloud storage revenue was $16.283 billion, or 30% of total revenue. Mobile and client revenue came to $13.114 billion, or 24%. Automotive and embedded revenue was $6.824 billion, or 13%.
DRAM and NAND both benefited from tight supply
By product, fourth-quarter DRAM revenue reached $39.8 billion, up 343% year over year and representing 73% of total company revenue. DRAM bit shipments rose in the mid-single-digit range sequentially, while pricing increased in the high-single-digit range. Micron said tight industry supply was the main driver.
NAND revenue reached $14.1 billion, up 526% year over year and 42% from the prior quarter. NAND bit shipments increased about 10%, while pricing rose about 30%, also reflecting supply constraints.
HBM demand stayed strong and most 2027 supply is already committed
Micron management said AI applications continue to push up requirements for memory capacity and performance. As model parameter counts grow, context windows expand, and concurrency rises, AI workloads require more memory and storage capacity. The company said memory and storage performance is becoming a key part of AI platform competitiveness.
HBM is one of the clearest beneficiaries of that trend. Micron said HBM revenue in the fourth quarter grew faster than overall company revenue, and the company has already completed agreements covering most of its HBM bit supply for 2027. Pricing in those agreements is significantly higher than in 2026.
The company is also advancing HBM4 and is working with Nvidia on custom HBM4E products for next-generation GPUs and the NVLink Fusion platform.
In NAND, demand tied to AI context storage, KV cache offload, and HDD replacement is expanding the data center SSD market. Micron said fourth-quarter data center SSD revenue was close to $10 billion, up more than 10x year over year and accounting for more than two-thirds of total NAND revenue.
Micron expects supply constraints to continue in 2027 and 2028
Micron expects global NAND bit shipment growth in 2027 and 2028 to be in the mid-20% range, while the industry remains supply constrained.
For DRAM, the company expects industry bit shipment growth in the low-20% range over the same period, with supply also staying constrained.
Micron added that even if the industry expands DRAM cleanroom capacity, it still cannot determine when supply and demand will return to balance as long as demand remains strong and customers continue to request additional volume.
Strategic agreements lock in long-term demand
To improve earnings visibility, Micron said it is using strategic customer agreements to reduce the traditional cyclicality of the memory business. The company has signed 26 strategic customer agreements so far, and expects the revenue covered by those deals to account for more than 35% of total revenue through 2030.
About three-quarters of the related revenue already has a pricing framework in place, with most agreements including price floors and ceilings. The remaining roughly one-quarter is negotiated periodically based on market prices.
Customer funding commitments tied to those agreements have risen to $32 billion, with the vast majority in cash deposits. Micron said the agreements include take-or-pay terms, meaning customers are obligated to purchase under the contract.
The company’s remaining performance obligations stand at about $150 billion. Based on minimum contract pricing, Micron said the associated margins are still expected to be well above the peak of any previous cycle. CEO Sanjay Mehrotra said the strategic customer agreements are increasing the company’s confidence in the durability of future financial performance.
Higher capital spending aimed at capacity growth after 2028
Strong demand also means Micron needs to keep expanding capacity. The company expects capital expenditures of about $11.5 billion in fiscal first quarter 2027 and about $25 billion in the first half of the fiscal year. Capital spending is expected to rise further in the second half.
Management said most of the increase in fiscal 2027 capital spending will go toward fabs and cleanroom construction to accelerate capacity additions in the second half of 2028 and beyond.
Micron said a new wafer fab does not immediately translate into effective supply. From the start of production to meaningful scale, capacity still requires several quarters of ramp-up. Over the next few quarters, market attention is likely to center on the gap between the pace of new capacity coming online and the growth of AI memory demand.