Micron Technology (MU -2.05%) just dropped some bombshell news on the AI world: Its customers expect their huge needs for memory to persist through at least 2031. That date used to be 2030, but as the AI build-out continues to ramp up, Micron's customers are extending their deals with it to lock in their access to memory chips for longer time frames.
But that was not the only bombshell Micron dropped for investors in the earnings report it released on Sept. 30. There were plenty of other tidbits in it that make the stock a screaming buy.
Image source: The Motley Fool.
How long can the memory sector's boom cycle last? Micron makes memory chips, which are highly commoditized products. Within each generation of the technology, there isn't a ton of difference between those made by one chip designer and another. This means tech companies can switch from one supplier to another without running into technical roadblocks, or source their memory from multiple suppliers to get what they need. However, something unexpected happened to the memory chip industry in 2026: Supply ran out.
Due largely to the hectic pace of the AI data center build-out, there is now far greater demand for memory chips than there is supply, so prices for memory chips have skyrocketed. The input costs for the manufacturers didn't change much; the memory chip companies were free to raise prices because of the laws of supply and demand, and they've done so. This has had a huge impact on the finances of Micron and its peers, and it showed up in Micron's results for the fourth quarter of its fiscal 2027 (which ended Sept. 3).
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Revenue was $54.2 billion in the quarter, up from $41.5 billion last quarter and $11.3 billion in the prior-year period. That's incredible growth, and with Micron projecting $61.5 billion in revenue next quarter, there's more growth to come.
Micron stock has soared by close to 500% over the past year as its profits have surged. However, in another sense, investors remain relatively cautious with the stock. Its forward price-to-earnings ratio is still just around 6.
The reason for that caution is that the memory-chip market has historically been highly cyclical. After every previous boom, some combination of slackening demand and expanded production capacity has shifted conditions from shortage to glut. Prices have come crashing down, dragging Micron's margins with them.
For now, though, I don't think investors have to be concerned about that.
Micron's management released some interesting information that downplays the outlook for another memory market slump, and it could be years before the conditions now benefiting it dissipate.
Micron's management is bullish on memory chip demand One statement in Micron's earnings deck is central to the investment thesis: "We expect memory and storage supply demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026."
That's right, Micron just told investors that as tough as 2026 was on its customers in terms of supply and demand, 2027 and 2028 will be worse. That may be a scary proposition for some companies, but if you're a Micron investor, it should be music to your ears.
It means demand will stay elevated and memory chip prices could continue to rise, leading to a longer period of wide profit margins for Micron.
Another major announcement was that some of Micron's strategic customer agreements are starting to include purchase commitments extending through 2031. That's huge news, because it indicates that the AI build-out, which some forecasters had expected would start to slow down in 2030, could last longer than expected.
All of this points to the likelihood that elevated memory chip demand could last for another five years. That would make this boom cycle by far the longest-lasting one Micron has ever experienced. That in turn means that there is still huge upside for its stock, and that investors don't need to worry about a cyclical downturn in the memory market arriving anytime soon.
With Micron expected to deliver huge growth over the next five years thanks to increasing AI demand, and with the stock trading for a dirt-cheap valuation of about 6 times forward earnings, it's a no-brainer stock to buy now.
Micron (MU) has rallied about 500% over the last 12 months — and the earnings growth justifies the stock price, according to George Tsilis. The problem?
Analyst’s Disclosure: I/we have a beneficial long position in the shares of ADBE, ARE, MCD, NVO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Micron Technology (MU -2.05%) stock has jumped by more than 6x over the past year, and it looks like the memory specialist's stunning rally won't be ending any time soon.
Micron released record results for the fourth quarter of fiscal 2026 (which ended Sept. 3), easily crushing consensus estimates amid the artificial intelligence (AI)-fueled memory boom. What's more, management clearly noted on the latest earnings call that the favorable memory market dynamics driving Micron's phenomenal growth will continue for the next couple of years.
Let's take a closer look at Micron's prospects and check the potential gains investors can expect from this high-flying growth stock over the next three years.
Image source: Micron Technology.
Micron says that the memory supply will get tighterMicron's fiscal 2026 revenue increased by 256% over the prior year, reaching $133.2 billion. Meanwhile, the company's operating income margin nearly tripled last year to 76%, as memory demand outstripped supply and pushed up prices. As a result, Micron's non-GAAP earnings per share increased by just over 9x from the prior year to $75.52 in fiscal 2026.
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Any questions about whether Micron could sustain its stunning earnings growth were put to rest by CEO Sanjay Mehrotra on the latest earnings call. He remarked:
As strong as fiscal 2026 was, we expect fiscal 2027 to be even better. Industry demand has strengthened since our last earnings call, and we expect memory and storage supply-demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026.In simple words, Micron should be able to sustain robust earnings growth over the next couple of years, at least. However, I won't be surprised to see Micron's momentum continue beyond fiscal years 2027 and 2028. That's because the company has been signing long-term contracts that should ensure healthy growth through the end of the decade, and even beyond 2030.
Micron notes that it has signed 26 strategic customer agreements (SCAs), which will account for 35% of its revenue through 2030. The company is now receiving customer requests to sign supply agreements extending into 2031. According to Micron, 75% of these SCAs have a defined price band with both a floor and a ceiling price. The pricing for the remaining long-term agreements will be negotiated with customers periodically in response to market dynamics.
Given that supply constraints in the memory market are expected to persist until 2030, there is a strong chance Micron will enjoy favorable pricing through the end of the decade. As such, it is easy to see why analysts have become more bullish about the company's long-term earnings growth expectations.
Can the stock become a multibagger once again?The good news for investors is that they can buy Micron stock at an incredibly attractive valuation. The stock is trading at just 14.6 times earnings, a discount to the S&P 500 index's earnings multiple of 23.5. Micron should trade at a significant premium considering its exponential earnings growth. Moreover, analysts are expecting its earnings per share to jump by 134% in fiscal 2027 to $176.69, followed by a 16% increase in fiscal 2028 to $205.30, according to Yahoo! Finance.
Assuming Micron clocks a conservative 10% earnings growth in fiscal 2029, its bottom line will reach $225.83 after three years. If this AI stock trades at even 10 times earnings at that time, well below the S&P 500 index's forward earnings multiple of 20, its price could reach $2,258. That implies potential upside of 106% in three years.
However, Micron's gains could be significantly higher if the market rewards the stock with a premium valuation. So, investors looking to buy a value stock with multibagger potential can still consider Micron Technology, as fast-growing memory demand in AI data centers and the accompanying supply shortage should drive further growth in the company's earnings over the next three years.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in MU over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
As of this writing, the S&P 500 (^GSPC +0.73%) has climbed around 12% in 2026, not counting dividends. Anyone who owns a fund tracking the index has had a good nine months.
But the average company in the index hasn't kept up. The S&P 500 Equal Weight Index, which includes the same companies but gives each the same weight, has gained around 9% over that time. It's a decent stand-in for how the average stock in the index has done.
A gap of around 3 percentage points may not look like much. But that shows a small group of stocks carried much of the index's gain -- and, I'd argue, a different group than many index fund owners might expect.
Image source: Getty Images.
A September splitFor most of 2026, the average stock was ahead. At the end of August, the equal-weight index was up around 14% for the year, compared to about 12% for its market-value-weighted sibling. It held the lead until the middle of September.
Then the two split apart. In September, the S&P 500 dipped around 0.5%, but the equal-weight index slid about 5%.
Around three-quarters of the stocks in the S&P 500 dropped over the month. Meanwhile, gains in a few of the index's biggest companies, like Apple (AAPL +1.02%) and Nvidia (NVDA +1.34%), hid the weakness in most of the rest.
The typical stock looks even weaker than the 9% number suggests. By my count, only about half of the companies that were in the index at the start of 2026 are up as of this writing.
Four stocks did half the workGoing into 2026, AI chip leader Nvidia made up about 7.8% of the Vanguard S&P 500 ETF, and Apple made up about 6.9%, according to the fund's annual report -- together, almost 15% of the money. Both stocks have done well since. Nvidia shares have climbed about 24% this year, to roughly $231 as of this writing, and Apple's have risen about 22%. With weights that big, gains like these move the whole index.
The other two began far smaller. Micron Technology (MU -2.05%) and Advanced Micro Devices (AMD +2.95%) were each a bit over half a percent of the fund.
But Micron's stock has nearly quadrupled in 2026, up around 285%, and AMD's has gained about 188%. The memory chipmaker's business changed almost as fast, too. Its revenue more than tripled in fiscal 2026 (the year ended Sept. 3, 2026), to around $133 billion.
Multiply each stock's starting weight by its gain, and these four total about 6 points of the S&P 500's 12% rise. Put another way, of the roughly $1,200 that $10,000 in an S&P 500 fund has made from higher share prices this year, about $600 came from Nvidia, Apple, Micron, and AMD.
The rest of the index, about 84% of the money in January, rose about 7% together.
Of course, not every giant helped. Tesla shares have dropped around 21% in 2026, and Microsoft has gained only about 6%. Tesla and Microsoft both began the year among the index's 10 largest holdings, and both lagged the average stock, which probably kept the gap from being wider.
What does this mean for index fund owners?Mainly, it means an S&P 500 fund did its job. It held this year's winners in proportion to their size, and as they rose, they automatically made up more of the fund. By my math, Micron's weight in the index has more than tripled since January, and AMD's has more than doubled.
That works in reverse, too. If the chip stocks behind this year's gain give some of it back, an S&P 500 fund might feel it more than the average stock would. After all, a stock that almost quadrupled in nine months could drop a lot, even if the business stays strong.
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Yes, a 3-point gap can close fast. The equal-weight index led as recently as mid-September. But for now, this year's 12% gain rests heavily on four stocks, three of them chipmakers.
I don't see that as a reason to sell an S&P 500 index fund or trade it for something else. Owning the biggest winners at their full size is how the index is built.
But I'd keep in mind that much of the fund's next move could depend on how a few chip stocks do, and not just on how the average company does.
In all my years of evaluating financial statements, I have never seen a company deliver this spectacular level of profit.
*Stock prices used were the afternoon prices of Sept. 30, 2026. The video was published on Oct. 2, 2026.
Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
SummaryMicron Technology, Inc. is upgraded to Buy, driven by accelerating Strategic Customer Agreements (SCAs) that enhance long-term revenue visibility and pricing power.Q4 FY26 results showed robust sequential growth, with DRAM and NAND prices rising sharply and margins spiking due to tight supply-demand dynamics.Over 35% of estimated 2030 revenue is now secured via SCAs, many with defined pricing bands and significant customer cash deposits, extending longer-term visibility.Despite strong fundamentals and a compelling forward P/E of 5.5 for 2028, MU and MUU investors should monitor AI capex trends and potential cyclicality risks post-2028. imaginima/iStock via Getty Images
Intro In my last article about Micron Technology, Inc. (MU), I gave myself credit for a good call. The stock nearly doubled in three months since I initiated coverage at $495 in April.
While admitting
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Micron Technology (MU -2.05%) just posted the biggest quarter yet. In its fiscal fourth quarter of 2026 (the 14-week period ended Sept. 3, 2026), revenue was $54.2 billion, up 379% from the same quarter last year.
Non-GAAP (adjusted) earnings per share rose about 11-fold to $33.42.
And management, pointing to demand fueled by artificial intelligence (AI), forecast about $61.5 billion of revenue for this quarter, which would be another 13% sequential gain.
The stock didn't dip at all. Shares rose 3% on Thursday, the first session after the report.
That breaks a pattern. The stock slid the day after five of Micron's eight reports before this, and all five times, it was up three months later.
And the rise came despite a much bigger spending plan.
Image source: Micron.
I measured each from the close the day after the report to 63 trading days later, or roughly three months.
The December 2024 report was the worst. Shares fell 16% the next day, after management said customer inventory cuts in consumer markets would make its next-quarter shipments lower than it had expected. Three months later, the stock was up about 8% from the post-report close.
The next three did much better. Shares dropped 8% after the March 2025 report and were up 29% three months later. A 1% dip after the June 2025 report turned into a 25% gain, and a 3% loss after the September 2025 report turned into a 71% gain. The fifth, after the March 2026 report, beat them all.
Notably, the stock also got back above its pre-report price in those three months every time.
When the pattern brokeBut the pattern isn't a rule. Shares fell 7% the day after the June 2024 report and were 17% lower three months later, never climbing back to their report-day close of roughly $142.
That June 2024 dip, though, followed a big rally. Micron's stock gained around 48% between its March 2024 and June 2024 reports. This time, shares closed on Sept. 30 at about $1,065, within 2% of their close on the day of the June 2026 report.
Gains after a report have a worse record. The stock climbed the day after the other three reports. A 15% pop after the September 2024 report turned into an 18% loss three months later, and a 16% spike after the June 2026 report turned into an 11% loss. Just the 10% gain after the December 2025 report kept going, up another 63%.
What about the bigger spending plan?I'd have expected spending to weigh on the shares. Micron said it plans to boost capital expenditures for fiscal 2027 versus its earlier plans, mostly for construction to speed up cleanroom space that comes online in late calendar 2028 and beyond. It expects roughly $25 billion of capital spending in its next two quarters, and more after that. That suggests more than $50 billion for the full fiscal year, nearly double the $27.4 billion it spent in fiscal 2026.
Spending like that can make memory investors nervous. More factory space eventually means more supply. And across the five fiscal years before 2026, Micron's DRAM average selling prices swung from annual gains in the low-40% range to annual drops in the high-40% range.
But the March 2026 report could be the closest match in the group. In it, Micron lifted its fiscal 2026 capital spending plan to over $25 billion, up from roughly $20 billion three months earlier, with most of the increase going to cleanroom facilities. It also said construction spending would climb by more than $10 billion in fiscal 2027. Shares dipped about 4% the next day. Three months later, they were up 155%.
The September 2025 report fits, too. Micron said then that fiscal 2026 capital spending would top fiscal 2025's $13.8 billion, and that dip led to the second-largest gain.
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And management pointed out on Wednesday's call that new buildings don't automatically mean new chips.
"[W]e will equip the clean rooms and build capacity to the demand trends that we see," said Manish Bhatia, Micron's president and chief operating officer.
Put another way, the two dips that came with bigger spending plans brought the two largest gains, while December 2024's weaker shipment forecast produced the smallest.
Still, five dips are a small sample. And I think the bigger risk to Micron is further out, once the cleanroom space it's paying for starts making chips. At around 6 times its expected fiscal 2027 earnings, the stock already looks priced for those profits to fall eventually.
This time, there wasn't a dip to buy, so the pattern that held five times doesn't apply. And I wouldn't buy Micron based on its post-report record either way.
SummaryMicron Technology, Inc. delivered robust FQ4 results, with $54.23B in revenue, an 87% GAAP gross margin, and $33.42 EPS, highlighting exceptional memory market strength.MU's forward strategy leverages $50B+ annual capex for early cleanroom construction, aligning future equipment deployment with rising Strategic Customer Agreements (SCAs) covering >35% of 2030 revenue.Over 75% of FY2027 output is already committed, with $150B in Remaining Performance Obligation and $32B in customer financial commitments, enhancing downside visibility.I assign MU stock a Buy rating, targeting $1,430–$1,500 per share (30–37% upside), anchored by $125–$135 normalized EPS and disciplined capital allocation. JHVEPhoto/iStock Editorial via Getty Images
Investment Thesis Fiscal fourth quarter results for Micron Technology, Inc. (MU) were incredible. It achieved revenues of $54.23 billion, its GAAP gross margins stood at 87.0%, adjusted EPS was $33.42, and adjusted free cash flow stood at $33.2 billion. Subsequently, management
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MU, NVDA, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Key Takeaways Technology is expected to post 42.1% earnings growth in Q3 2026, led by an 85.5% semiconductor surge.NVIDIA and Micron highlight the earnings leverage from AI spending and infrastructure-driven memory demand.Energy earnings are expected to surge 111.8% as Middle East disruptions push Brent above $100. Nine months into 2026, investors have had to observe a rare combination of accelerating AI investment, renewed monetary tightening, elevated Treasury yields and a sharp energy-price shock. Yet these crosscurrents have not translated into a uniform market response.
Technology has remained at the center of the equity story as hyperscalers and enterprises continue to commit enormous sums to AI infrastructure. Energy has benefited from a dramatic rise in crude prices amid geopolitical disruptions. At the same time, higher borrowing costs and persistent inflation have complicated the valuation outlook, particularly for growth stocks whose future cash flows are more sensitive to interest rates.
Equity Gains Defy a Challenging EnvironmentThe resilience of equities despite these pressures makes the nine-month review particularly relevant as the fourth quarter begins. From January to September, the S&P 500 gained 11.4%, while the Nasdaq Composite was up 15.6%. Reuters reported that global equity indexes were only about 2% below record highs. However, the strong headline performance came against a challenging macro backdrop, with the 10-year Treasury yield moving above 5% and Brent crude gaining about 40% in the third quarter.
Jan-Sept. 2026 Price Performance
Image Source: Zacks Investment Research
The headline gains, however, do not tell the entire story. Market leadership remained concentrated in areas benefiting from the AI investment boom, while energy stocks gained from the sharp rise in crude prices and changing geopolitical dynamics. Meanwhile, elevated yields and persistent inflation continued to raise the bar for equity valuations.
Against this backdrop, technology and energy emerged as two of the most consequential sector stories of the first nine months, albeit for very different fundamental reasons.
Technology: AI Turns Capital Spending Into an Earnings EngineTechnology's dominance in 2026 has increasingly been supported by earnings rather than AI enthusiasm alone. According to the Zacks Earnings Trend report (Sept. 30 update), the tech sector is expected to post 42.1% earnings growth in the third quarter of 2026, with semiconductor earnings projected to surge 85.5% on 62.8% revenue growth.
The concentration of growth is notable. Per Zacks estimates, Tech earnings growth would moderate to 29.6% excluding semiconductors and to 20.6% excluding NVIDIA, Micron and Alphabet. This highlights the significant earnings leverage from AI spending, while also showing the outsized contribution of a handful of companies.
NVIDIA (NVDA - Free Report) exemplifies this trend, with fiscal second-quarter 2027 revenues rising 106% year over year and Data Center revenues jumping 117%. Micron Technology (MU - Free Report) offers another direct play on AI infrastructure. Yesterday, the company reported fiscal fourth-quarter 2026 revenue surge of 379.3% year over year, beating the Zacks Consensus Estimate by 6.33%, while EPS of $33.42 topped the Zacks Consensus Estimate by 5.73%. The results reflect strong demand for memory products tied to AI infrastructure.
Energy: Geopolitics Creates a Second Earnings EngineEnergy's earnings story is being driven by a different force. Middle East disruptions pushed Brent above $100 per barrel during September. Going by the trend report, Zacks expects Energy earnings to surge 111.8% in the third quarter, while the sector received the most pronounced upgrade to its earnings outlook since the quarter began.
Chevron (CVX - Free Report) reported $12 billion in second-quarter 2026 adjusted earnings, its highest quarterly profit in six years, with upstream earnings rising 200% to $8.2 billion and U.S. production reaching a record nearly 2.1 million barrels of oil equivalent per day. Exxon Mobil (XOM - Free Report) reported $14.7 billion in second-quarter adjusted earnings, $23.6 billion in operating cash flow and $17.2 billion in free cash flow.
Jim Cramer and Michael Burry rarely agree on anything, but their clash over Micron has turned into a very public, very high-stakes argument about whether the AI bubble pops before June 2027.
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Two of the most-watched names in retail investing are on opposite sides of Micron Technology (NASDAQ:MU | MU Price Prediction) this week. Michael Burry told readers on September 28, 2026 that put options had replaced his short positions. His Micron puts expire in June 2027 at a strike of roughly $500. Jim Cramer took the other side on two straight nights. He said anyone shorting Micron ahead of an aggressive December buyback is “digging their own grave.” Cramer did not name Burry.
What Burry Needs From Here A put gains value when a stock falls below its strike price. Micron trades near $1,097.20, so Burry’s position needs the stock to lose about half its value by expiration. Burry wrote that “the bubble in AI may burst sooner than later” and added, “I am moving timelines up. As such, I want more leverage.” Options traders are leaning his way on that expiry. The put/call ratio for the June 17, 2027 contracts stands at 4.21, compared with 0.63 across the full chain.
Cramer’s Lunch With Micron’s CEO On CNBC on October 2, Cramer described a lunch where he told CEO Sanjay Mehrotra that Micron is “no longer a cyclical company” and is now “a secular growth company.” According to Cramer, Mehrotra said that “with the six multiple, it doesn’t make sense.” Micron trades at about 7 times forward earnings, with an analyst target of $1,533.80.
Results That Make Shorting Expensive Micron’s fiscal fourth-quarter earnings release showed revenue of $54.23 billion against estimates of $50.97 billion. Non-GAAP EPS of $33.42 beat the $31.35 estimate and was up 1,002% year over year. Gross margin reached 87.0%, compared with 45.7% a year earlier. For fiscal Q1, management guided to $61.5 billion ± $1.5 billion in revenue and $38.15 ± $1.00 in EPS.
The secular argument rests on contracts. Micron now has 26 strategic customer agreements, up from 16 in August. More than 75% of 2027 output is already committed, and remaining performance obligations total about $150 billion. CFO Mark Murphy said, “Even at floor prices, we expect margins meaningfully above any prior cycle peak margins.” Mehrotra added, “We do not have line of sight to when supply and demand will return to balance.”
December Buyback Cramer Calls the Trap Door Micron plans to step up capital returns starting December 9, 2026, the second anniversary of its CHIPS agreements. The company intends to return 100% of excess cash over time, mainly through buybacks. It ended the quarter with $68.3 billion in net cash, while the current authorization is only $2.2 billion, so management expects to seek more soon. Fiscal 2026 buybacks totaled $650 million. Filings and updates are posted on Micron’s investor relations site.
Why Cramer Points to Nucor Cramer said Nucor Corporation (NYSE:NUE) is the only company he has seen make a similar shift, moving from cyclical steel to diversified brands and gaining a higher valuation. Nucor is up 80.07% over the past year and down 4.11% over the past month. It shipped a record 7.1 million tons from its steel mills in Q2, and management named data centers as a multi-year source of demand.
What Investors Should Track Micron is up 503.34% over the past year and 284.67% year to date, the kind of run that gets dissected in our free playbook on spotting the next Nvidia-scale winner early. Even so, the stock’s reaction to the report was muted, as headlines focused on chip cycle and margin worries. The fiscal Q1 gross margin guide of approximately 86.25% is slightly below Q4, though management called Q1 the floor for fiscal 2027. Keep an eye on the size of the new buyback authorization and on HBM pricing for 2027. Burry’s case depends on that pricing breaking down before June.
Data Sources CNBC, October 2, 2026: Cramer’s lunch with Mehrotra, his secular growth framing and the Nucor comparison. Same source: the December buyback date Cramer cited. Contact [email protected] for any questions or corrections.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MU, NVDA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
It turned into a relatively busy week, with several key market developments potentially providing fresh fuel for the bull market.
This morning, the latest employment data showed a slowdown in hiring, which the market welcomed as it reduced expectations for further rate hikes. On Wednesday evening, Micron delivered another outstanding earnings report, reinforcing the strength of the AI infrastructure boom. And finally, Bitcoin and the broader crypto market have continued to gain momentum, signaling a notable improvement in risk appetite.
Taken together, these developments have helped support increasingly constructive price action across risk assets. The Nasdaq is printing fresh all-time highs this morning, while the S&P 500 is knocking on the door of record highs.
Micron Technology Crushes Earnings and the Stock Points HigherMicron Technology ((MU - Free Report) ) delivered another outstanding earnings report Wednesday evening, reinforcing the strength of the AI-driven memory boom. Revenue, earnings and margins all surged, while management offered another strong outlook as demand continues to overwhelm available supply.
More important than any single quarter, however, is memory’s rapidly growing importance within the AI infrastructure buildout. According to UBS estimates, memory represented roughly 14% of total AI capital spending in 2025, but that share is expected to jump to 37% in 2026 and 64% by 2027.
That is an extraordinary shift and helps explain the dramatic acceleration in Micron’s business. As increasingly memory-intensive AI systems are deployed, demand for DRAM, HBM and NAND continues to rise while new supply remains difficult to bring online quickly.
Micron is sitting directly in the middle of that supply-demand imbalance, and its latest results suggest the cycle still has considerable momentum.
The price action is also encouraging. After peaking at the start of the summer following a manic year-long rally, Micron spent several months building a broad sideways consolidation and digesting those gains.
Over the last few weeks, shares broke decisively above that range before forming another bullish continuation pattern. Now, Micron appears to be breaking out from that bull flag as well, potentially setting the stage for another leg higher in the near term.
Image Source: TradingView
Jobs Report: Weaker, But Not Necessarily WeakThis morning’s employment report was undeniably soft. The U.S. economy added just 29,000 jobs in September, while July was revised down to a 10,000-job loss and August was revised lower to 133,000. Altogether, July and August payroll growth was reduced by another 60,000 jobs.
For markets, however, there may be a silver lining. The weakening labor data reduces pressure on the Fed to raise rates again and has helped pull Treasury yields lower.
More importantly, today’s payroll numbers may not be quite as alarming as they would have been several years ago. The number of new jobs needed each month simply to keep unemployment stable has fallen considerably as population and labor-force growth have slowed. St. Louis Fed estimates put that breakeven rate somewhere around 15,000 to 87,000 jobs per month.
So there are really two messages in today’s report. Hiring has clearly cooled, and the downward revisions reinforce that trend. But 29,000 jobs today does not necessarily carry the same recessionary implications it once would have.
For investors, that could prove to be a favorable combination: enough labor-market cooling to ease pressure on interest rates, without yet signaling a major deterioration in the economy.
For investors, that combination could be constructive: enough cooling to take pressure off interest rates, without clear evidence that the economy is rolling over.
Bitcoin Goes from Laggard to Market LeaderOne of the more interesting developments over the last three months has been the dramatic change in Bitcoin’s relative performance.
Earlier in the summer, Bitcoin ((IBIT - Free Report) ) was a notable laggard even as technology stocks continued to advance. That divergence raised questions about risk appetite and liquidity beneath the surface of the market. Since then, however, the picture has changed sharply.
As the chart shows, Bitcoin has gone from severe underperformance to major outperformance, gaining roughly 35% over the period compared with about 10% for the Nasdaq 100. Just as importantly, Bitcoin has repeatedly consolidated those gains in bullish continuation patterns before breaking higher again.
That matters beyond crypto itself. Bitcoin tends to be one of the more liquidity- and risk-sensitive assets in financial markets, so renewed leadership can be viewed as evidence that investors are becoming increasingly willing to take risk.
It is not a perfect market-timing signal, but alongside new highs in technology stocks, easing pressure from interest rates, and continued strength in AI spending, Bitcoin’s breakout adds another piece of evidence that the broader risk-on environment is improving.
Image Source: TradingView
The Bull Market Gets More Support
Taken together, this week’s developments strengthen the broader bull case. Micron’s results confirm that the AI infrastructure boom remains firmly intact, softer labor data is taking pressure off interest rates, and Bitcoin’s resurgence points to improving liquidity and risk appetite.
There are still risks, particularly if the labor market weakens more sharply from here. But for now, the combination of strong earnings, easing rate pressure and improving participation across risk assets continues to favor further upside.
SummaryMicron Technology, Inc. has realized outsized gains driven by an unprecedented memory price boom, but I maintain a sell rating due to rising volatility and cyclical risks.MU’s recent results beat expectations with 379% YoY revenue growth, yet the majority of gains stem from memory price increases, not sustainable volume expansion.I see clear signals of memory price deceleration into 2027, with consensus expecting a peak followed by a sharp decline, challenging MU’s forward growth and margin trajectory.Despite attractive PEG and scale advantages, I prefer to rotate out of MU stock, as its risk/reward skews negative amid maturing cycle dynamics and looming guidance headwinds. ismagilov/iStock via Getty Images
I am still out of Micron Technology, Inc. (MU) after a Sell rating at the end of June, when I wanted to explain the replaceable role of the company's key product: memory. Since then, the stock first
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Every time Micron beats earnings, institutions sell and the stock drops. That pattern has repeated itself enough times that I started treating the pullbacks as a buying opportunity, and the numbers behind my latest purchase surprised even me.
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I added more Micron Technology (NASDAQ:MU | MU Price Prediction) this week, and I expect to keep doing it. I keep seeing the same cycle: Micron beats, institutions sell, and I buy. Micron’s recent earnings history shows 9 beats and 0 misses, and each drop gives me another chance to add.
What Keeps Pulling Me Back Micron makes the memory and storage that AI systems depend on. Bigger models and longer context windows need more memory for every workload. Customers now lock in supply years ahead. Management said “More than 75% of our output is already committed for 2027” and that customers want supply guaranteed beyond 2030. A business that used to swing with commodity prices now runs on multi-year contracts, and that change is my whole case.
Institutions Sold the Beat Again Fiscal Q4 revenue reached $54.23 billion against a $50.97 billion consensus. Non-GAAP EPS of $33.42 exceeded the $31.35 estimate. I have seen this pattern before. After the fiscal Q3 beat of 23.79%, the stock fell 19.61% in a week and 32.39% over thirty days. The market had already priced in a beat, and the stock pulled back after a strong earnings report. I treat those drops as my chance to add shares.
Three Numbers Behind My Conviction Margins. Non-GAAP gross margin hit 87.0%, up from 45.7% a year earlier. Management expects margins “meaningfully above any prior cycle peak margins” even at contract floor prices.
Contracts. Micron has signed 26 Strategic Customer Agreements, all with take-or-pay volumes. Remaining performance obligations total about $150 billion, and customer orders reached $32 billion, mostly cash deposits.
Cash. Fiscal 2026 free cash flow reached $62.31 billion. Net cash stands at $68.3 billion against $5.2 billion of debt. The board raised the quarterly dividend 30% to $0.15, and management said: “Over time, we expect to return 100% of our excess cash to shareholders.”
Why My Money Goes Here Instead of NVIDIA The obvious AI pick is NVIDIA (NASDAQ:NVDA). Its latest non-GAAP gross margin was 75.0%, below Micron’s 87.0%. Its revenue grew 105.8% year over year, while Micron grew 379.27%. NVIDIA’s stock is valued at about 46 times earnings. At $1,097.39, Micron trades at roughly 15 times its fiscal 2026 non-GAAP EPS of $75.52. NVIDIA’s supply obligations rose to $279 billion, largely for memory procurement. I would rather own the supplier those dollars flow to.
Risk That Could Hurt This Position Memory has always moved in cycles, and Micron is spending heavily. Capex hit $30.71 billion in fiscal 2026, and first-half fiscal 2027 capex should reach about $25 billion. New fabs in Idaho, Japan and New York start producing between mid-calendar 2027 and calendar 2030. Once that industry capacity comes online, pricing could crack. I take all of it seriously. Still, contracted floors, take-or-pay volumes and largely committed 2027 output give me more visibility than any past memory cycle offered.
Why My Buy Button Stays Active Fiscal Q1 2027 guidance calls for $61.5 billion in revenue and $38.15 in non-GAAP EPS, and management expects sequential revenue growth every quarter this fiscal year. Management also said, “We do not have line of sight to when supply and demand will return to balance.” Until that changes, I will keep an eye on the stock after each earnings report.
Contact [email protected] for any questions or corrections.
SummaryMicron Technology is rated Buy, trading at just 6.8x forward earnings despite robust demand signals and a 379% YoY revenue surge to $54.2B.Over 75% of MU's 2027 output is already committed, with $32B in customer deposits and strategic take-or-pay contracts providing margin floors above historical peaks.MU is set to reach its cash target by December 2026, enabling a substantial new buyback authorization as the CHIPS Act cap lifts, with potential for a 7–8% buyback yield.Key risk: if major customers broadly cut memory per server, 2028 pricing power could erode, but current demand and prepayments suggest the rally has more runway.62 Followers
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MU either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Micron Technology, Inc. has surged over 500% in a year, driven by unprecedented AI-related memory demand and record earnings. MU reported blockbuster results: an 87% gross margin, $54B revenue (+380% YoY), and guided above consensus for both EPS and revenue. However, gross margins are unsustainably high for a cyclical hardware company; normalization and increased supply could trigger a sharp margin and valuation correction.
DA Davidson just issued the most bullish price target on Wall Street for Micron, and the math behind it hinges on something that has never lasted this long in any previous memory cycle.
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Gil Luria of DA Davidson raised his price target to $2,100 from $2,000, the highest on the Street, and maintained a Buy rating after Micron Technology’s (NASDAQ:MU | MU Price Prediction) September 30, 2026 earnings report. Rosenblatt also raised its target to $1,900 from $1,500.
The stock rose 3.03% on October 1 and closed at $1,097.39. From that close, the new target implies about 91% upside.
The shares have gained 503.44% over the past year and 284.73% in 2026, according to DA Davidson. For the price to nearly double again, memory prices would have to stay tight longer than in any earlier cycle.
Which Half of the $2,100 Target Does the Work, according to DA Davidson Luria applies 13 times to calendar 2027 earnings. For a semiconductor stock, that multiple is low. The assumption is that pricing holds near peak levels well into 2027.
Luria points to 26 long-term supply agreements and says memory markets “could be even tighter in 2028 than they are today.” These agreements turn commodity sales into contracted volume on a take-or-pay basis, supporting roughly $150 billion in remaining performance obligations.
Results That Explain the Optimism Fiscal fourth-quarter revenue reached $54.23 billion, up 379%, and adjusted EPS was $33.42. Guidance calls for $61.5 billion in revenue and $38.15 in EPS next quarter.
Memory factories cost roughly the same to run regardless of selling price, so most extra revenue becomes profit. Gross margin reached 87%, and the same effect works just as hard when prices fall.
Cash Returns Make the Strongest Bull Argument Cantor Fitzgerald’s C.J. Muse projects over $333 billion in free cash flow over the next eight quarters. Vivek Arya at Bank of America (NYSE:BAC) expects buybacks of $60 billion to $100 billion annually by fiscal 2028 and 2029, years Luria expects to be tighter.
Cash returned to shareholders does not depend on where pricing goes after payout. Micron already holds $68.3 billion in net cash and plans to step up capital returns starting December 9, 2026, according to DA Davidson.
Why $2,100 Is an Outlier, according to DA Davidson Goldman Sachs (NYSE:GS) rates the stock Hold at $1,100. Morningstar (NASDAQ:MORN) puts fair value at $700, and consensus targets range from about $1,378 to about $1,520.
Skeptics worry about new supply, which has historically ended memory upcycles. Micron’s Idaho fab targets first wafers in mid-calendar 2027, and rivals are spending heavily, according to DA Davidson. The stock gained only 1.56% over the week that included the earnings report.
What Would Break the Bull Case for MU Stock The cash returns make a stronger case than the $2,100 target, according to DA Davidson. The contracts and buybacks give Micron a buffer that earlier memory booms lacked, though consensus targets are a more realistic guide to value.
This view would prove wrong if a fiscal first quarter falls short of the $61.5 billion guide, no new buyback authorization is announced by December 9, 2026, or the first quarter in which guidance stops rising, according to DA Davidson. If any of those happens, the extreme target would likely lose its relevance to the stock’s valuation.
Contact [email protected] for any questions or corrections.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
As Micron Technology, Inc. (Nasdaq: MU) stock gained on Friday’s pre-market, trading at approximately $1,107.25 at the time of writing, driven by its fiscal fourth-quarter and full-year 2026 earnings results that shattered expectations, Wall Street analysts are strongly convinced of a rally towards a new all-time high (ATH) in the next 12 months.
Among the analysts who issued ratings on Micron stock on Thursday is Egor Tolmachev of Freedom Broker. Tolmachev maintained a ‘Buy’ rating for MU on October 1, according to a note Finbold analyzed on October 2.
Freedom Broker set a 12-month price target for Micron stock at $1,600. As such, this firm signals a possible 44.50% upside by October 2, 2027.
This thesis is centered on recent Fiscal Quarter 4 (Q4) 2026 financial results, which exceeded consensus expectations and company estimates. Additionally, Tolmachev based this bullish sentiment on the company’s performance, clearing the high end of management guidance across revenue, gross margin, and earnings per share (EPS).
Notably, Micron reported fiscal Q4 revenue of $54.23 billion and issued Fiscal First Quarter 2027 revenue guidance of $61.5 billion, plus or minus $1.5 billion. Moreover, this company is banking on surging demand for artificial intelligence (AI)-related memory and server hardware.
MU stock price prediction On October 1, Micron stock price received ‘Buy’ ratings from over a dozen Wall Street analysts, including Gil Luria at D.A. Davidson, Mark Li at Bernstein, Melissa Weathers at Deutsche Bank AG(ETR: DBK), and Vivek Arya at Bank of America Corp. (NYSE: BAC).
MU stock price prediction. Source: Finbold As such, 26 Wall Street analysts surveyed by TipRanks over the past three months have set an average 12-month price target of $1,581.40, suggesting a possible 42.82% upside.
MU stock price prediction 2026. Source: TipRanks Is Micron stock a good buy? Over the past 12 months, Micron stock has soared by more than 497%, thereby pushing its market capitalization to $1.2 trillion at the time of reporting.
MU price performance for the past 12 months. Source: Finbold Consequently, even though Micron has strong fundamentals boosted by the AI boom, Wall Street analysts do not expect another parabolic rally over the next 12 months, but rather an uptrend of less than 50%.
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Micron Technology (MU +3.03%) is making cash much faster than it's spending it. The memory chipmaker's non-GAAP (adjusted) free cash flow was $62.3 billion for its fiscal year that ended Sept. 3 -- up from $3.7 billion in fiscal 2025. But the company spent just $650 million of it buying back its own shares.
Alongside its fiscal fourth-quarter results on Wednesday, Sept. 30, Micron said it plans to increase capital return starting Dec. 9. Over time, it intends to give all its excess cash back to shareholders.
Shares trade near $1,065 as I write, giving the company a market cap of about $1.2 trillion. How much of Micron could a buyback that large retire?
Image source: Micron.
A cash pile that keeps growingShowing how fast the cash is coming in, Micron's adjusted free cash flow (cash from operations minus net capital spending) was $33.2 billion in the fiscal fourth quarter, the final three months of the year. This compares to $18.3 billion in fiscal Q3 and just $803 million in the year-ago quarter. Revenue climbed 379% year over year to $54.2 billion, and net income surged almost 12-fold to $37.7 billion. In other words, the fourth quarter alone brought in over half of the year's free cash flow -- an impressive acceleration even for this memory boom.
Most of the cash still sits on the balance sheet. Micron finished the year with $73.5 billion in cash and investments against $5.2 billion in debt, leaving net cash of $68.3 billion.
Capital return, meanwhile, hardly registered. The $650 million buyback came to around 1% of the year's free cash flow.
And Micron spent more (about $1.1 billion) withholding shares from employees' stock awards to pay their taxes. Even with both, the diluted share count climbed around 1.4% year over year in the fourth quarter. And as of May 28, just $2.16 billion was left on the company's current repurchase authorization.
Why wait until December?The timing seems linked to Micron's federal CHIPS Act funding. The company's latest quarterly filing says its buyback authorization is subject to restrictions under its CHIPS Act direct funding agreements. And chief financial officer Mark Murphy pegged the bigger return to Dec. 9, 2026, the second anniversary of the signing of those agreements.
"Over time, we expect to return 100% of our excess cash to shareholders," Murphy said in his prepared remarks for the earnings call.
Later in the call, Murphy said Micron expects to be near its target cash level by the end of this fiscal quarter. He added that the excess would go back to shareholders mainly through buybacks, and that the company expects to seek a bigger authorization soon.
Notably, management hasn't said what that target cash level is.
The cash could retire around 5% of the stock a yearBecause management hasn't defined "excess cash," I'll use fiscal 2026's adjusted free cash flow as a stand-in, assuming Micron's cash already sits near the level it wants to hold.
At around $1,065 a share, $62.3 billion would buy back about 58 million shares in one year. That comes to around 5% of the roughly 1.13 billion shares Micron had outstanding in June.
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I'd be more careful adding the $68.3 billion of net cash on top of that. Around $12.7 billion of Micron's cash is customer deposits linked to its long-term supply agreements, and the company expects to return that money to customers over time.
Free cash flow also faces a bigger spending plan. Micron expects around $25 billion of capital expenditures in just the first half of fiscal 2027, near the $27.4 billion of net capital spending in all of fiscal 2026. Still, Murphy said fiscal Q1 free cash flow should be much higher than the fourth quarter's $33.2 billion.
Of course, the price Micron pays matters, too. With the stock at about 14 times earnings, based on fiscal 2026 results, every dollar spent on shares buys about 7 cents of last year's profit. That price is arguably appealing if memory prices hold, but it might look expensive if fiscal 2026 ends up being a peak.
In the end, retiring roughly 5% of the share count a year would probably give earnings per share a steady boost. But that depends on memory prices staying near today's levels, and the higher spending doesn't begin until December. For now, I'd count the buyback as another point in Micron's favor and wait to see the share count drop.
September was a real up-and-down month for tech memory and storage specialist Micron Technology (MU +3.03%). At different points in those weeks, investors got spooked about companies involved in the monster build-out of artificial intelligence (AI), then turned sharply bullish on many of those companies following predictions of looming shortages. All the while, Micron was the subject of numerous analyst updates, positive and negative, in the run-up to its latest quarterly earnings report.
When the dust cleared, Micron's stock was -- happily, for investors -- well in positive territory. It gained more than 11% over the course of the month.
Image source: Getty Images.
Bullish and bearishThat's because the most impactful of those factors was quite positive. In the middle of the month, on successive days, an analysis from Citigroup (C -1.92%) and comments from Intel (INTC -0.19%) CEO Lip-Bu Tan predicted significant memory shortages in the near future.
The key reason why, it'll shock very few tech sector followers to learn, is AI. The resources needed to build out AI compute are considerable, including vastly more memory than previous technologies. A shortage in memory makes Micron's wares that much more valuable, and therefore profitable. That was in contrast to growing sentiment earlier in the month that AI has limits, which could cool the hot growth of some hardware makers.
Micron's fiscal fourth quarter results were published on Sept. 30 after market hours, so the period's blowout results didn't play a part in the company's rise that month. However, as typically happens with a high-profile stock, a clutch of analysts issued fresh takes on Micron in the run-up to the earnings release. And quite a few were bullish. Pundits from JPMorgan Chase's (JPM +0.71%) J.P. Morgan, TD Cowen, and DA Davidson, among others, reiterated their equivalents of buy recommendations on the company. This was exacerbated by other positive pundit moves, such as the $1,280-per-share-to-$1,520 price target hike from Baird's Tristan Gerra.
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Not deterred by the down notesNot all developments and analyses regarding Micron were bullish. Wells Fargo's (WFC +0.25%) Aaron Rakers lowered his price target, for one. Another downbeat development was OpenAI's decision late in the month to pause work on several AI models in development, following instances of its AI agents acting in ways not intended for their deployments.
For the most part, though, as a leading memory and storage purveyor in an environment where both goods are poised to become more expensive, Micron is in an excellent position. Those quarterly results would cement this impression and show that the stock remains loaded with potential.
Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel, JPMorgan Chase, and Micron Technology. The Motley Fool has a disclosure policy.
Sandisk (SNDK +2.75%) is still the top-performing stock in the S&P 500 (^GSPC +0.19%) this year. Shares of the flash memory business traded near $1,730 as I write, up about 629% from their $237 close at the end of 2025. Moderna is second, up about 571%.
The lead has been narrowing, though. Sandisk dropped about 23% in the third quarter, from roughly $2,274 on June 30 to around $1,740 on Sept. 30. It was the stock's first quarterly decline since the second quarter of 2025.
Then Micron Technology (MU +3.03%) shared what seemed like more good news. In prepared remarks for Micron's Sept. 30 earnings call, CEO Sanjay Mehrotra said the company expects memory and storage supply-demand conditions to be "much tighter" than in 2026, in both 2027 and 2028.
Three months earlier, Micron had pointed to 2028 as the year industry supply would begin to improve gradually.
But Sandisk stock was down less than 1% on Thursday, as of this writing. After Micron's June results, it surged 22% in one day.
I think the muted reaction makes sense. A shortage that lasts longer might hold Sandisk's earnings near today's level for longer. But it doesn't necessarily drive them much higher.
Image source: The Motley Fool.
Flash prices are still rising, just more slowlyNAND flash is the kind of memory that holds data even with the power off -- and it's all Sandisk sells. Micron's NAND revenue hit a record $14.1 billion for its 14-week fiscal fourth quarter, which ended in early September. That was up 526% from a year ago and 42% sequentially. Bit shipments (the amount of storage sold) climbed around 10% sequentially, while prices rose about 30%.
These are still strong price gains. But in fiscal Q3, Micron's NAND prices had surged in the mid-80% range.
Sandisk's own numbers follow the same pattern. Its sequential revenue growth slowed from 97% in its fiscal 2026 third quarter to 51% in the fourth (the three months ended July 3), when revenue hit $8.97 billion, up 372% year over year. For fiscal Q1, management guided for sequential growth of around 15% to 20%. Its non-GAAP (adjusted) gross margin climbed from about 51% in fiscal Q2 to 78% in fiscal Q3 and 85% in fiscal Q4, with a fiscal Q1 guide of 83% to 85%.
This suggests Sandisk's profitability has flattened out near a record high.
Sandisk has already promised much of its future output to big customers. These multi-year deals, which it calls New Business Model agreements, have prices whose variable part can move only between floors and ceilings. Management expects them to cover over half the bits Sandisk sells in fiscal 2027 and around two-thirds in fiscal 2028.
The floors protect Sandisk if flash prices fall. But the ceilings limit how much it gains if the market tightens further. Management doesn't seem eager to raise margins, either.
"We want to get this kind of boom and bust out of it," CEO David Goeckeler said on Sandisk's fiscal fourth-quarter earnings call in August. On that call, he described a gross margin in the mid-80% range as a fair return.
Sure, a longer shortage still helps. Sandisk said in August that it expects its flash to remain on allocation (rationed among customers) past calendar 2027. Micron now expects the whole NAND industry to stay supply-constrained through 2028, even as industry bit shipments rise in the mid-20% range a year.
This arguably makes Sandisk's current earnings look more durable than they did in June.
Is Sandisk stock a buy after its third-quarter drop?The third-quarter drop left the stock much cheaper. At around $1,730, it trades for about 8 times earnings, based on analysts' average adjusted estimate for the fiscal year ending next summer.
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In other words, investors seem to be treating Sandisk's current profits as temporary.
If Micron is right, these profits might hold up at least through 2028. But the stock's valuation still depends on what Sandisk earns after the shortage ends, and Micron says it can't yet tell when memory supply and demand will get back into balance.
In the end, I think Sandisk is more reasonably priced at $1,730 than it was at $2,274 in June, and Micron's outlook gives its earnings more time. But its margin has stopped rising, and more of its output now sells under contracts with price ceilings. I'd still want to see how these contracts hold up when flash prices drop before buying the stock.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Micron's (MU +3.03%) fourth-quarter numbers are in, and the memory chip superstar delivered another blockbuster report.
Results again exceeded high expectations as revenue jumped 379% to $54.2 billion, ahead of the consensus at $51.5 billion. On the bottom line, adjusted net income soared more than ten times to $38.4 billion, with adjusted earnings per share climbing from $3.03 to $33.42, topping estimates at $31.82 billion.
Wall Street largely shrugged off the move, and that's not surprising. Micron stock is up more than 500% over the last year, and those gains bake in the skyrocketing profits that the company has delivered in fiscal 2026.
After surging through the spring, the stock has now been mostly flat for the last few months. The trillion-dollar question now facing Micron is how long this booming cycle will last. Driven by a shortage of memory due to AI compute demand, Micron and peers like Samsung, SK Hynix, and Sandisk have seen unprecedented profits as prices have surged.
However, memory prices are historically cyclical, and new supply will come online over the next three to five years, meaning Micron's eye-popping operating margin above 80% won't last forever. Management guided gross margins to fall slightly on a sequential basis in the first quarter, meaning that its profit margins may have finally peaked. Mathematically, they can't go much higher.
Still, to the question of how long the cycle will last, Micron provided more evidence that should reassure investors.
Image source: Micron.
Why Micron can still go higherComing into the report, Micron had indicated that most of its high bandwidth memory (HBM) is already sold out in fiscal 2027, and that supply-demand conditions would remain tight, indicating that prices would continue to be elevated.
However, the company updated that forecast in the fourth-quarter earnings report for fiscal 2028, saying that it expected "memory and storage supply-demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026."
That's a change from its last earnings report, which specified calendar 2027, but did not specifically call out 2028. Management said that industry demand had strengthened since its last earnings call, and that forecast indicates that profits should be significantly higher for at least the next two years than they were in fiscal 2026, a year in which the company made $86.8 billion in net income.
Based on its last four quarters, Micron trades at 15 times earnings. Forward estimates are likely to go higher from here and currently call for $171.90 in EPS next year and $189.62 for fiscal 2028, giving the stock a forward P/E of less than 7.
Additionally, Micron's new strategic customer agreements (SCAs), which lock customers into five-year agreements, will cushion the downside of the cycle. The company now has more than 35% of its revenue through 2030 committed through SCAs, with most of that pricing locked in.
Looking further out, long-term demand for memory is robust as physical AI takes shape, leading to greater production in robotics, including self-driving cars and autonomous robots.
The long-term picture still looks brightMicron is betting on this future with a new $100 billion facility in upstate New York, and two new advanced manufacturing facilities at its Idaho HQ. From these investments and others, the company's production capacity is expected to triple over the next decade, and it will shift production to HBM, which carries a higher price point than traditional DRAM chips.
While the market sets the price for chips, Micron is positioning itself to capitalize on ongoing AI-related demand as the technology advances and memory demand continues to grow.
Finally, Micron's low valuation sets it up for significant share buybacks once restrictions related to the CHIPS Act expire on Dec. 9.
Even after another blowout quarter, the market's hesitancy to bid the stock higher is understandable given the cyclical history. However, Micron is making the right moves to capitalize on the boom through long-term contracts, capital investments, and likely share buybacks, and that should push the stock higher over the coming quarters.
Key Takeaways October and November lead midterm years.AI growth and reasonable valuations support QQQ.Market breadth and yield comparisons favor bulls. A Complex Market EnvironmentThe past few months on Wall Street have been confusing, complex, and often contradictory. On the one hand, U.S bond yields have reached their highest level since 2002, oil prices have soared, the War in Iran has yet to conclude, and market breadth (participation) has been atrocious. Meanwhile, the major market indices have been extremely resilient. For instance, in the normally seasonally brutal September, the Nasdaq 100 Index ETF ((QQQ - Free Report) ) gained 3%. The tech-heavy index is now less than 1% away from all time-highs.
Instead of relying on gut feel and news headlines, investors should rely on historical data sets. From this perspective, bulls may be in for a pleasant fall surprise. Below are 5 reasons why.
1. Breadth Washout: Bluekurtic Market Insights (@Bluekurtic) notes that fewer than 42% of S&P 500 stocks are above their 200-day moving averages. “In prior cases, SPX was higher 5 days later 100% of the time.”
Image Source: Bluekurtic Market Insights
2. AI Growth Remains Robust: Micron ((MU - Free Report) ) is one of the best barometers of the strength of the AI boom. Wednesday, Micron delivered a massive earnings report, including record profits. Micron is now generating a blistering $553 million in revenue per day! Read more about Micron’s earnings here.
3. October Seasonality Is Not So Spooky: According to data from Ryan Detrick of Carson Investment Research, October is the strongest month of the midterm-year seasonality calendar. Better yet, November is the second strongest.
Image Source: Carson Invesment Research
4. Treasury Yield Recency Bias: The biggest fear on Wall Street currently is that the 30-year Treasury yield is over 5% (which can mean lower valuations). However, as Charlie Bilello of Creative Planning points out, “That seems really high until you zoom out and learn that the yield was actually higher than this every single day in the 1980s and 92% of days in the 1990s.” Despite perceived high yields, these two decades were fantastic times to be long U.S. equity markets.
5. Tech Valuations are Reasonable: Despite the hype around AI and tech stocks, their valuations remain reasonable. In fact, Alphabet ((GOOGL - Free Report) ), Meta Platforms ((META - Free Report) ), and Microsoft ((MSFT - Free Report) ) all have price-to-earnings ratios that are below 30x.
Image Source: Zacks Investment Research
Bottom Line
While market contradictions and macro headlines can spark investor anxiety, historical data and strong fundamentals suggest bulls have plenty to cheer about this fall.
Key Takeaways MU earnings were again impressive, with the company delivering huge growth. The AI-driven memory cycle remains robust, with its outlook eluding to continued positivity. Micron Technology (MU - Free Report) delivered another monster quarter, with its latest results reinforcing just how powerful the AI-driven memory cycle has become.
Micron Earnings Reveal Huge GrowthQ4 revenue reached a record $54.2 billion, up 31% sequentially and 379% year over year. Adjusted EPS came in at $33.42, topping the Zacks Consensus estimate of $31.61 by nearly 6%. Cash generation was similarly massive, with operating cash flow reaching $44 billion and adjusted free cash flow coming in at $33.2 billion during the quarter.
Pricing remained a major tailwind, as DRAM revenue climbed 27% sequentially to a record $39.8 billion, while NAND revenue jumped 42% to $14.1 billion, both beating our consensus estimates handily. The strong pricing environment helped push its adjusted gross margin to an impressive 87%.
Image Source: Zacks Investment Research
Importantly, visibility remains strong. Micron has already completed agreements for the vast majority of its calendar 2027 HBM bit supply at significantly higher year-over-year pricing. The company also has 26 strategic customer agreements that it expects will account for more than 35% of revenue through 2030.
And the outlook suggests momentum remains firmly intact. Micron expects fiscal Q1 revenue of $61.5 billion at the midpoint, alongside adjusted EPS of $38.15. Management also expects sequential revenue growth in every quarter of fiscal 2027 and sees DRAM and NAND markets remaining supply-constrained throughout calendar 2027 and 2028.
Bottom Line
Micron’s (MU - Free Report) latest release strengthened the AI growth story significantly. Record revenue, powerful pricing, strong HBM visibility, and massive cash generation all stood out.
Perhaps most importantly, management’s outlook suggests the cycle still has room to run, with tight supply conditions and AI-driven demand providing a highly favorable backdrop heading into fiscal 2027.
Key Takeaways Micron delivered another blockbuster quarter as AI-driven HBM and data-center demand fueled record results.Q4 earnings and revenue both topped expectations, while gross margins expanded dramatically.Strong AI memory demand and tight supply continue to support Micron's growth outlook. Micron Technology (MU - Free Report) ) delivered another blockbuster earnings report on Wednesday, with surging demand for high-bandwidth memory (HBM), data-center storage, and tighter memory supply driving record results for its fiscal fourth quarter.
The memory-chip giant continues to benefit from accelerating AI infrastructure spending, particularly as advanced accelerators from Nvidia (NVDA - Free Report) ) and Advanced Micro Devices (AMD - Free Report) ) require increasingly large amounts of high-performance memory.
Image Source: Zacks Investment Research
Micron Delivers Another Blowout QuarterMicron reported record quarterly earnings of $33.42 per share, soaring from Q4 EPS of $3.03 a year ago and beating the Zacks Consensus Estimate of $31.61 by nearly 6%.
Revenue surged 379% year over year to a quarterly peak of $54.23 billion, topping expectations by more than 6%. Furthermore, Micron's adjusted gross margin reached approximately 87%, highlighting the dramatic improvement in memory pricing and product mix.
For its full fiscal year 2026, Micron posted record adjusted EPS and revenue of $75.52 per share and $133.19 billion, up a staggering 883% and 256%, respectively.
AI infrastructure remains the biggest catalyst. Data-center solid-slate drive (SSD) revenue approached $10 billion in Q4, more than 10 times the year-ago level and accounting for over two-thirds of Micron's NAND revenue. Meanwhile, Micron continues to ramp up its HBM4 production and said it is working with Nvidia on a customized HBM4E product called NV-HBM for next-generation GPUs and NVLink Fusion platforms.
Micron has surpassed sales estimates in seven straight quarters and has exceeded earnings expectations for 14 consecutive quarters, with an impressive average EPS surprise of 21% in its last four quarterly reports.
Image Source: Zacks Investment Research
Micron's Growth Outlook Remains ExceptionalMomentum isn't expected to slow much this quarter.
For its current fiscal Q1 2027, Micron expects revenue of $61.5 billion, plus or minus $1.5 billion, which would reflect roughly 350% YoY growth. The guidance also came in ahead of Wall Street's forecast of $57 billion.
Better still, Micron projects Q1 adjusted EPS of $38.15, plus or minus $1, also comfortably ahead of expectations of around $35.00, and would represent a nearly 700% increase from earnings of $4.78 per share in the prior-year quarter.
Management also expects an adjusted gross margin of roughly 86.25%, suggesting extraordinarily strong memory pricing and AI-driven demand should continue supporting profitability.
MU Stock Still Looks CheapDespite its stellar +250% year-to-date rally, the argument for buying Micron stock rests partly on the company’s attractive valuation.
Thanks to its explosive earnings growth, MU remains surprisingly inexpensive from a valuation standpoint even at over $1,000 a share.
MU is trading at less than 7X forward earnings, well below the broader market and its Zacks Computer - Integrated Systems industry average of around 21X.
That discount remains notable considering Micron's exposure to HBM, AI servers, data-center SSDs, and increasingly tight DRAM and NAND supply.
Image Source: Zacks Investment Research
Bottom LineMicron's Q4 results reinforce one of the strongest growth stories in the semiconductor industry, with AI-driven memory demand fueling extraordinary revenue, earnings, and cash-flow expansion.
For now, MU lands a Zacks Rank #3 (Hold) following the stock's enormous run in 2026. That said, a buy rating could be on the way as earnings estimate revisions are likely to move higher in the coming weeks following the memory chip leader's strong Q4 results and guidance.
SanDisk shares SNDK rose in afternoon trading Thursday after Citi reiterated its Buy rating on the memory and storage company following Micron Technology’s latest earnings report.
The stock was up over 2% after staying under pressure in morning trading.
Citi maintained a $2,100 price target for SanDisk, implying more than 20% upside from current levels.
The brokerage said Micron’s results offered a favorable read-through for NAND fundamentals, particularly as demand from artificial intelligence data centers continues to expand.
Micron reported a 42% sequential increase in NAND revenue, while NAND prices rose about 30%, well ahead of the roughly 20% increase expected by consensus estimates.
Micron management also indicated that its NAND supply is expected to grow more slowly than overall industry supply growth in calendar 2026, reinforcing expectations that the market will remain tight.
"Sequentially, NAND revenue +42%, B/S +10% as prices increased ~30% (vs. consensus +20% qq/Citi +34% qq) on tight NAND conditions," said Citi analyst Atif Malik in a Thursday investor note.
"Mgmt expects Micron NAND supply to grow less than industry supply growth in CY26. For CY27/CY28, expect industry NAND bit shipments to grow in the mid-20% range and the industry to remain supply constrained during both years."
Citi said the NAND market could remain supported by structural demand from AI infrastructure.
One key driver is the increasing use of solid-state drives to offload key-value cache, or KV cache, from more expensive and constrained high-bandwidth memory and other computing resources.
"We remain constructive on favorable NAND S/D fundamentals on durable AI-led datacenter demand (KV cache offloading to more cost-effective SSDs), and this read-through supports SanDisk's thesis of strong business fundamentals and increased visibility," Malik said.
Citi acknowledged that Micron’s expected NAND supply growth is higher than SanDisk’s expectation for industry compound annual growth of roughly the mid-teens.
However, the brokerage maintained its constructive view because of resilient demand and visibility provided by non-binding manufacturer agreements.
"We note while MU NAND B/S growth is higher than SanDisk's expectations for industry CAGR of mid-teens, we remain constructive given durable demand and visibility via NBMs," Citi said.
The favorable NAND backdrop has already translated into a dramatic rally for SanDisk shares.
The stock has gained more than 530% this year and more than 1,300% over the past 12 months, as investors have increasingly focused on AI-driven demand for memory and storage products.
Micron shares, however, were down more than 0.15% Thursday despite reporting better-than-expected quarterly results and providing an upbeat outlook.
One concern for investors is that Micron's earnings beat was smaller than those delivered in previous quarters.
Morgan Stanley analyst Joseph Moore noted that Micron posted an earnings beat of about 5% in the latest quarter, compared with beats of roughly 20% to 40% in several preceding quarters.
The company's gross-margin guidance of about 86.25% also came in slightly below elevated expectations.
Micron attributed the sequential decline to temporary costs, including inventory absorption, higher fiscal 2027 bonus accruals and cleanroom startup expenses.
Management described the quarter as the cyclical floor for gross margins in fiscal 2027 and expects profitability to expand as revenue grows through the remainder of the year.
Analysts remain bullish on Micron Analysts nevertheless continued to see support from tight supply conditions.
"The report 'isn't an earnings surprise story anymore,'" said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
"We're into the realm where earnings durability is driving shares higher, rather than any single set of blowout results."
Raymond James analyst Melissa Fairbanks highlighted Micron's comments that it has no clear visibility into when NAND supply will catch up with demand.
While the shortage could allow Micron to continue raising prices and expanding profitability, Fairbanks said the constrained supply environment could also limit near-term volume growth.
Goldman Sachs raised its price target for Micron to $1,250 from $1,100 while maintaining a Neutral rating.
Analyst James Schneider cited strong demand and a growing base of customer commitments.
Micron now has 26 long-term agreements covering about 35% of projected revenue through fiscal 2030, with roughly 75% of those agreements carrying structured pricing.
For SanDisk, the combination of AI-driven storage demand, limited NAND supply, and long-term customer commitments provides a supportive backdrop, even after the stock's extraordinary gains this year.
"There's no denying" Micron (MU) earnings were "fantastic," says Logan Gilland, who believes the company's report demonstrates long-standing need for AI memory. However, any subtle demand decline is something he sees hitting the stock already "priced for perfection.
Key Takeaways Micron has become one of the most profitable companies on Wall Street.The company enjoys unprecedented revenue visibility.A persistent structural shortage in DRAM preserves Micron's pricing power. Micron Reports Blowout EarningsWednesday, Micron ((MU - Free Report) ), the AI memory leader, crushed Wall Street’s earnings expectations on every metric. Once again, the quarter delivered record profits and triple-digit revenue and earnings growth. Thanks to soaring AI demand, Micron has become not only one of the most profitable companies in AI but also one of the most profitable on Wall Street. In addition to the blockbuster quarter, Micron’s Q1 2027 guidance did not disappoint, with CEO Sanjay Mehrotra stating that fiscal 2027 will be even stronger.
Micron reported earnings per share of $33.42, beating Wall Street’s already lofty expectations by 5.73%. Over the past four quarters, Micron has beaten Zacks Consensus Analyst Estimates by a juicy 21% on average. Meanwhile, last night’s earnings release marks the 14th consecutive quarter that Micron has beaten Zacks Consensus Analysts’ Estimates.
Image Source: Zacks Investment Research
Can Micron Shares Still Move Higher?Over the past 5 years, Micron shares have delivered investors scorching-hot returns, surging over 1,300%. However, this latest earnings report suggests shares still have room to run. Below are 5 reasons to own Micron shares into 2027, including:
Despite its Performance, Micron is Extremely CheapNext quarter, Micron is expected to generate more quarterly profit than NVIDIA ((NVDA - Free Report) ) did in the first quarter of 2026. At the time, NVIDIA generated $40 billion in quarterly profit and had a market cap of $4.8 trillion. Conversely, Micron is expected to do the same, yet has a market cap of just $1 trillion. With a reasonable price-to-earnings ratio of 23.61x, it’s hard for investors to argue that Micron is overvalued.
Image Source: Zacks Investment Research
Micron Enjoy Incredible Revenue VisibilityAccording to management, Micron has 26 multi-year take-or-pay agreements, covering more than 35% of expected revenue through 2030. Customer financial commitments have soared to $32 billion from $22 billion last quarter, with the vast majority in cash deposits. Revenue visibility of this magnitude is extremely rare on Wall Street.
Image Source: Zacks Investment Research
Micron Supply/Demand Imbalance is IntactLast night, Micron confirmed that the DRAM supply/demand imbalance remains, saying:
“We do not have line-of-sight to when supply and demand will return to balance.”
In other words, Micron can maintain its pricing power and best-in-breed gross margins.
Image Source: Zacks Investment Research
Physical AI Will Add Another Layer of DemandEven before the physical demand wave has begun, Micron has delivered spectacular earnings growth. However, Micron expects humanoid robot production to add another layer of demand. Micron confirmed that physical AI can become a significant driver of memory and storage demand by the end of this decade.
Bullish Chart PatternMicron is forming the right side of a bullish cup-with-handle chart pattern.
Image Source: TradingView
Bottom Line
Wednesday, Micron delivered a record-shattering quarter highlighted by explosive earnings growth, unmatched revenue visibility, and a compelling valuation.
Micron Technology (NASDAQ:MU) reported fourth-quarter financial results Wednesday that beat analyst estimates. The company highlighted strong growth and future results, which could be a victory for investor Ross Gerber.
Ross Gerber’s Micron PredictionBack in April, Gerber Kawasaki CEO Ross Gerber predicted to Benzinga that Micron would soon hit a $1 trillion market capitalization. Around a month later, that prediction came true.
“Micron to me will be a trillion-dollar company in a matter of a year or two,” Gerber told Benzinga at the time.
At the time of Gerber’s prediction, Micron had a market capitalization of $584 billion, suggesting upside of around 71%.
“I’m heavily invested in Micron. If you look at the valuation to growth rate, it’s just like crazy. It’s a crazy thing.”
Micron surged into the trillion-dollar market capitalization club in May and hasn’t looked back. The company, at a market capitalization of $1.18 trillion, is now worth more than the likes of Berkshire Hathaway, Eli Lilly, Advanced Micro Devices, JPMorgan & Chase and Walmart.
In April, Micron was the sixth-largest holding in the AdvisorShares Gerber Kawasaki ETF (NYSE:GK) at 6.09% of assets. Today, Micron is the largest holding, at 10.27% of the ETF’s assets.
Following Micron’s fourth-quarter financial results, Gerber took to social media to share his take.
"Micron is a beast. Amazing numbers and only getting better… this is not a cyclical business anymore. I don’t think I’ve ever seen anything like this. Amazing." Gerber tweeted.
The investor also highlighted Micron’s revenue and operating income by segment in another tweet and said, "Just wow! A green AI monster."
Read Next
Micron’s Earnings and FutureGerber correctly predicted Micron’s trillion-dollar market capitalization and that shares were undervalued.
Based on Q4 results and guidance, Micron may have more upside.
Micron’s quarterly revenue was $54.23 billion, up 379% year over year, setting new company records.
"Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027," Micron CEO Sanjay Mehrotra said.
The company’s guidance calls for first-quarter revenue of $60 billion to $63 billion. This represents year-over-year growth of 339.9% to 361.9% from last year’s $13.64 billion first-quarter total.
The guidance shows that 300%+ growth may not be over anytime soon and Gerber’s prediction of a $1 trillion market capitalization could be just the beginning.
Goldman Sachs raised its price target for Micron Technology MU to $1,250 from $1,100 while keeping a Neutral rating after the memory-chip maker posted quarterly results above Wall Street expectations, according to a Thursday analyst report.
Micron reported fiscal fourth-quarter revenue of $54.23 billion and adjusted earnings of $33.42 per share. Revenue was up from $11.32 billion a year earlier, while adjusted earnings rose from $3.03 per share.
Goldman analyst James Schneider highlighted strong demand and a growing base of customer commitments. Micron now has 26 long-term agreements covering about 35% of projected revenue through fiscal 2030, with about 75% carrying structured pricing.
Schneider kept the Neutral view as the firm weighs tight supply against potential capacity growth later in the cycle. Goldman expects additional industry supply could pressure high-bandwidth memory pricing in 2028.
Micron’s NASDAQ: MU stock could double and still look undervalued, because the Q4 earnings report for its fiscal year 2026 (FY2026) answered three important questions about the duration of high-bandwidth memory (HBM) shortages, operational leverage, and cash flow.
Micron Technology Today
MU
Micron Technology
$1,062.63 -2.48 (-0.23%)
As of 01:08 PM Eastern
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$179.61▼
$1,255.000.06%
24.08
$1,378.08
Simply put, the market is misjudging HBM demand and how tight capacity remains. Micron says its capacity is already 75% booked through the end of 2027, with supply/demand forecasted to tighten further in 2028.
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Longer term, capacity is 35% booked through 2030, a figure backed by signed contracts and likely to increase as the year progresses.
The gains in monetization, operational leverage, and cash flow that the report revealed were impressive, but they won't last forever.
Eventually, the HBM market will stabilize, but the odds are high it won't be until sometime in 2028 or later, with the chances of an even later recovery increasing each quarter.
In Micron's fiscal Q4, gross margin nearly doubled year over year, operating margin more than doubled, operating cash flow jumped 7.7x to more than 81% of revenue, and net income and adjusted earnings per share grew by 11x. Looking ahead, management expects an even stronger year and issued guidance for fiscal Q1 well above consensus forecasts.
Micron’s Blowout Quarter Shows AI Memory Demand Is Still AcceleratingMicron had a robust quarter with demand supporting higher pricing, driving revenue gains and wider margins. Net revenue rose to $54.23 billion, up 379.1% year over year (YOY) and 30.8% sequentially, more than 500 basis points (bps) above expectations, driven by strength in both DRAM and NAND markets. NAND strength is especially important because it stores the vast amounts of data AI systems generate and use, pointing to broader, sustained AI demand beyond HBM. DRAM, which includes HBM, grew 27% sequentially and 252% for the year, while NAND grew 42% sequentially and 274% for the year.
All segments produced triple-digit growth, led by the Core Data Center business. It grew 11.4x YOY, followed by 4.75x growth in Automotive and Embedded, 3.6x in Cloud Memory, and 3.5x in Mobile and Client.
Micron’s guidance was strong, which has positive implications for analyst estimates. While strength was expected, the size of the beat suggests the group will need to adjust its Q1 and full-year forecasts and will likely do so again as the year progresses, keeping the bullish trends intact. The likely outcome is that Micron continues to show strength, outperforms its guidance, and raises its full-year forecast before year-end.
Analysts' Conviction in Micron’s Bull Case StrengthensAnalysts responded enthusiastically to the release, highlighting top-line strength and durability signals and reaffirming bullish ratings or raising price targets. As it stands, the 45 MarketBeat tracks show strong conviction in the Moderate Buy rating, with an 88.8% Buy-side bias, no Sell ratings logged, and an uptrend in price targets. The consensus forecasts about 30% upside from September’s closing price, but the trend matters, pushing the high end to $2,000, nearly 100% upside when reached.
Institutional trends suggest an upside movement is brewing. The group owns more than 80% of the shares and reverted to buying in Q3 after posting mixed activity in Q2. Their buying aligns with the August price bottom and subsequent rebound, setting the stage for the uptrend to continue now that fiscal Q4 results and forward guidance have been released. More importantly, the group signals a floor for price action, limiting downside risk.
Micron’s Balance Sheet Derisks the OutlookInvestors should not overlook Micron’s balance sheet. Improved leverage, margin expansion, and cash flow have driven significant improvements since the previous quarter and year. Key details include cash up 4x to over $38 billion; higher investments, inventory, and receivables; current assets up 3x YOY; and total assets more than doubling.
Other key details include higher current and total liabilities, but growing more slowly than assets; massive debt reduction; and improved cash flow capacity and shareholder equity. Equity, the measure of shareholder value, grew by 38% sequentially and more than 2.5x YOY, and is expected to continue expanding in the coming year.
Micron’s price action was iffy in after-hours trading following the release. Shares fell on the news, revealing a market expecting strength. However, the market did not fall far, suggesting buyers were waiting, if not aggressively eager, to buy on good news.
The likely outcome is that MU continues consolidating within its existing range, potentially gaining traction by year’s end. The biggest risks are macroeconomic, including inflation, higher interest rates, and the cost of capital for expansions, but cash and cash flow mitigate them. Micron is well-positioned to execute its strategy in 2027, including plans to accelerate capacity increases.
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Key Takeaways Micron expects DRAM and NAND markets to remain supply constrained through calendar 2028. MU plans higher fiscal 2027 CapEx, with more spending aimed at construction and cleanroom capacity. Micron has 26 strategic customer agreements covering more than 35% of estimated revenues through 2030. Micron Technology, Inc. (MU - Free Report) used its fiscal fourth-quarter 2026 earnings call to emphasize a tighter memory supply backdrop, stronger customer commitments and heavier investment to expand capacity.
Management also framed fiscal 2027 as another record year, with sequential revenue growth expected each quarter and supply constraints projected through calendar 2028.
MU Sees Supply Tightness Extending Through 2028Sanjay Mehrotra, chairman and CEO, said memory and storage supply-demand conditions should be much tighter in calendar 2027 and 2028 than in 2026.
He expects industry DRAM bit shipments to grow in the low-20% range in both years, while NAND bit shipments grow in the mid-20% range. Micron expects both markets to remain supply constrained.
Mehrotra added that the company does not have line of sight to when supply and demand will return to balance, citing robust demand and the time required to add cleanroom capacity.
Micron Raises Fiscal 2027 Investment PlansMehrotra said Micron plans to increase fiscal 2027 capital expenditures versus prior plans, with most of the increase directed to construction and faster cleanroom availability in late calendar 2028 and beyond.
Mark Murphy, executive vice president and CFO, said first-half fiscal 2027 CapEx is expected to be about $25 billion, including roughly $11.5 billion in the first quarter. Second-half spending is projected to be higher.
Murphy said construction CapEx should grow meaningfully faster than equipment spending as Micron builds capacity while retaining flexibility on equipment timing.
MU Builds More Revenue Visibility Through SCAsMehrotra said Micron has signed 26 strategic customer agreements, or SCAs, representing more than 35% of estimated revenue through 2030.
Financial commitments tied to the agreements have increased to $32 billion, mostly in cash deposits. Murphy said remaining performance obligations are about $150 billion for agreements with determined pricing frameworks.
During Q&A, Mehrotra clarified that more than 75% of Micron's 2027 output is already committed across SCA and non-SCA customers, while discussions increasingly center on 2028 demand.
Micron's HBM and Data Center Mix Stay CentralMehrotra said the vast majority of Micron's calendar 2027 HBM bit supply is covered by agreements with significant year-over-year price increases, helping narrow the gross-margin gap with conventional DRAM.
He also highlighted continued execution on HBM4 and Micron's work with NVIDIA on a custom HBM4E implementation for next-generation platforms.
In NAND, data center SSD revenues reached nearly $10 billion in the fiscal fourth quarter and represented more than two-thirds of the company’s NAND revenues, reflecting AI-related storage demand.
MU Guides to Another Record QuarterMurphy guided fiscal first-quarter 2027 revenues of $61.5 billion, plus or minus $1.5 billion, with non-GAAP gross margin of about 86.25% and non-GAAP EPS of $38.15, plus or minus $1.
He said the fiscal first quarter should mark the gross-margin floor for fiscal 2027, with higher margins expected afterward as pricing improves and temporary cost pressures ease.
For fiscal fourth-quarter 2026, Micron reported non-GAAP EPS of $33.42, which beat the Zacks Consensus Estimate of $31.61. Revenues of $54.23 billion also topped the $51 billion consensus estimate.
Micron Faces Questions on Cash Returns and MarginsA UBS analyst pressed management on capital returns and target cash levels. Murphy said Micron expects to be around its target cash level by the end of the fiscal first quarter and plans stronger capital returns beginning Dec. 9.
A Cantor Fitzgerald analyst asked about the first-quarter margin decline. Murphy said roughly $1 billion of higher costs, including incentive compensation and startup expenses, are affecting the quarter.
A Bank of America analyst questioned whether tighter supply could persist into 2028. Mehrotra reiterated that customer demand remains strong and new capacity will take time to ramp.
Micron Keeps Capacity Discipline at the CenterManagement's message centered on expanding capacity without abandoning discipline. Mehrotra tied the investment program to long-term customer commitments and sustained demand across AI-driven markets.
Murphy reinforced that Micron intends to match equipment deployment to demand conditions while maintaining strong free cash flow and increasing capital returns over time.
MU's Zacks Rank and Style Score SignalsMicron currently carries a Zacks Rank #3 (Hold). Its Growth Score, Momentum Score and VGM Score are all A, while its Value Score is C.
The Style Score framework favors A and B grades, especially when paired with a Zacks Rank #1 (Strong Buy) or #2 (Buy). A Zacks Rank #3 can still be held within that framework, but the current Rank does not carry the same estimate-revision signal as the top two ranks. The Zacks Rank can change as analysts revise estimates after the just-reported results.
You can see the complete list of today’s Zacks #1 Rank stocks here.
U.S. stocks traded lower this morning, with the Dow Jones index falling over 200 points on Thursday.
The Dow traded down 0.42% to 50,693.86 while the NASDAQ fell 0.09% to 26,837.36. The S&P 500 also fell, dropping, 0.17% to 7,638.28.
Leading and Lagging Sectors
Energy shares jumped by 1.3% on Thursday.
In trading on Wednesday, materials stocks fell by 1.2%.
Top Headline
Micron Technology Inc (NASDAQ:MU) reported upbeat financial results for the fourth quarter of fiscal 2026, after the closing bell on Wednesday.
Micron posted fourth-quarter revenue of $54.23 billion, beating analyst estimates of $50.75 billion, according to Benzinga Pro. The semiconductor company reported adjusted earnings of $33.42 per share, beating estimates of $31.45 per share.
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In commodity news, oil traded up 2% to $92.23 while gold traded up 0.2% at $4,195.30.
Silver traded up 1.1% to $61.215 on Thursday, while copper fell 0.7% to $6.5760.
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European shares were lower today. The eurozone’s STOXX 600 declined 1.1%, while Spain’s IBEX 35 Index fell 1.7%, London’s FTSE 100 fell 1.6%, Germany’s DAX fell 0.8%, while France’s CAC 40 dipped 1.4%.
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Asian markets closed mixed on Thursday, with Japan’s Nikkei 225 jumping 3.3%, and India’s BSE Sensex falling 0.79%.
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The ISM manufacturing PMI declined to 54.5 in September from 54.6 in August, versus market estimates of 55. Construction spending increased by 0.9% month-over-month to an annual rate of $2,203 billion in August versus a revised 0.1% decrease in July. The S&P Global manufacturing PMI declined to 55.9 in September versus a preliminary reading of 57.0. U.S. jobless claims fell by 1,000 to 197,000 in the week ended Sept. 26, down from market estimates of 200,000. Photo via Shutterstock
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Micron Technology Inc (NASDAQ:MU) shares were down 2% Thursday morning, but analysts responded to the chipmaker's latest earnings with price targets as high as $1,625, citing deeper pricing visibility and a major capital return program on the horizon.
Micron again reported results above the high end of its outlook and guided its next quarter well above expectations. Management said it sees sequential revenue and gross margin growth every quarter through fiscal 2027.
The company forecast fiscal first-quarter revenue well above expectations on Wednesday, after fourth-quarter revenue surged 379% from a year earlier to $54.23 billion.
The fourth-quarter figure compared with estimates of $51.07 billion. Adjusted earnings per share came in at $33.42, ahead of the $31.61 estimate, while GAAP earnings per share were $32.87.
Bank of America reiterated its Buy rating and $1,550 price target, calling Micron a top AI pick. The firm raised its fiscal 2027 and 2028 sales estimates by 20% and 30%, and lifted EPS forecasts to $172 and $198. It noted that strategic customer agreements have grown to 26 from 16 last quarter, with take-or-pay terms covering about 35% of expected revenue through 2030.
UBS held its $1,625 target, saying the story is now about duration and capital return. It pointed to customers extending supply agreements into 2031 and estimated Micron could buy back roughly 30% of the company over two years.
Wedbush kept its Outperform rating and $1,400 target. It highlighted that more than 75% of Micron's 2027 output is already committed, with remaining purchase obligations of about $150 billion and $32 billion in customer financial commitments. Wedbush raised its fiscal 2028 EPS estimate to $230.55 from $148.55 and noted the shares trade at under 5 times its out-year estimates.
Capital returns are a common theme. Micron expects to reach its target cash level by the end of the first fiscal quarter, with buybacks stepping up from Dec. 9 and a larger authorization to be sought, versus the current $2.2 billion.
Bank of America flagged risks including the unclear near-term buyback size, possible customer HBM de-spec and interest in Chinese memory suppliers.
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There's no clear signs that Micron (MU) demand, nor that of its peers, is slowing down any time soon. The company's earnings showed an 11-fold increase in data center revenue with guidance offering little weakness.
Micron Technology, Inc. reported strong fiscal Q4 results, handily beating estimates on the top and bottom lines. Continued strong pricing power led to significant yearly increases in adjusted gross margins and net income. The MU balance sheet continues to strengthen, with a low valuation supporting potential upside for shares into 2027.
Micron Technology (MU -0.53%) has been one of the best-performing stocks in the S&P 500 this year, as it plays a critical role in the growth of artificial intelligence and the infrastructure that powers the technology. Micron is the only major U.S.-based manufacturer of high-bandwidth memory that is needed for AI, and that's pushed Micron stock up more than 265% this year.
But following the company's earnings report for its fiscal fourth quarter of 2026, CEO Sanjay Mehrotra identified another fascinating growth opportunity for Micron -- robotics. To be specific, humanoid robots that utilize AI.
Speaking to analysts on the company's earnings call, Mehrotra cited the growth of physical AI through autonomous vehicles, which he says require more than 200 gigabytes of memory and multiple terabytes of storage.
"Humanoid robots are expected to have comparable memory and storage requirements to autonomous vehicles," Mehrotra said. "With the anticipated increase in both units and memory content, physical AI can become a significant driver of memory and storage demand by the end of this decade. Several physical AI customers are sampling our next-generation products, and we are increasing investments in our technology roadmap to ensure we are prepared to capitalize on this opportunity."
Image source: Getty Images.
Micron is already seeing huge increases in revenue and profits from growing demand from data centers. If growth in physical AI, such as robotics and autonomous vehicles, continues to increase, Micron could be looking at the beginning of a very long growth cycle.
About Micron stockThere are two major types of memory -- NAND, which is for long-term storage; and DRAM (dynamic random-access memory), which holds information for the short term. Think of it like this: your laptop needs DRAM to hold data while an app or program is running, and NAND holds data after your device is turned off.
DRAM provides fast access to the data that processors need, and high-bandwidth memory, a specialized form of DRAM, delivers the extremely high data-transfer speeds required by AI processors. Whether AI is operating in a data center or helping to power a robot, DRAM plays a critical role.
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Revenue in the fiscal fourth quarter (ending Sept. 3) was $54.23 billion, up 379% from a year ago and 31% on a sequential basis. Micron reported net income of $37.7 billion, an increase of 1,077% from the previous year. Diluted earnings per share came in at $32.87 versus $2.83 per share last year.
Full-year revenue was $133.19 billion, up from $37.38 billion a year ago. Diluted earnings exploded to $74.33 per share, up from $7.59 per share in fiscal 2025.
Micron saw strong growth in all of its business units.
Unit Q4 2026 Q4 2025 Percentage Gain Cloud Memory $16.28 billion $4.54 billion 258% Core Data Center $18.0 billion $1.58 billion 1,041% Mobile and Client $13.11 billion $3.76 billion 248% Automotive and Embedded $6.82 billion $1.43 billion 375% Source: Micron
"Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027," Mehrotra said. Management issued guidance for revenue between $60 billion and $63 billion for the first quarter of fiscal 2027. The midpoint would represent a 339% increase from Q1 2026, when Micron recorded revenue of $13.64 billion.
What do AI robots potentially mean for Micron?According to Futurum Equities analyst Shay Boloor, the potential is large. In a post on X, Boloor noted that adding 200 gigabytes of DRAM -- the amount used by autonomous vehicles -- to humanoid robots is "effectively putting server-level memory into millions of machines outside the data center."
And robotics is not far-fetched. Tesla has huge plans for its Optimus robots, which CEO Elon Musk plans to make commercially available and capable of household chores, caring for children, and caring for the elderly. Tesla has shut down its Model S and Model X electric vehicle lines to ramp up Optimus production.
Humanoid robotics represents a potentially lucrative market for Micron, which is already seeing incredible growth for its memory products. That could extend Micron's growth window well beyond the current AI infrastructure build-out.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MU, SNDK either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given that any particular security, portfolio, transaction or investment strategy is suitable for any specific person. The author is not advising you personally concerning the nature, potential, value or suitability of any particular security or other matter. You alone are solely responsible for determining whether any investment, security or strategy, or any product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. Steven Cress is the Head of Quantitative Strategy at Seeking Alpha. Any views or opinions expressed herein may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.
Micron just posted a record quarter, analysts are raising price targets, and the stock still fell. The reason why reveals a deeper tension about where memory markets are actually headed.
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Micron Technology (NASDAQ:MU | MU Price Prediction) stock fell 1.72% to $1,046.79 despite record fiscal Q4 results and analyst price target increases. Goldman Sachs (NYSE:GS) raised its target to $1,250 from $1,100, Mizuho (NYSE:MFG) to $1,400, and Rosenblatt to $1,900, while Morningstar (NASDAQ:MORN) cut its fair value to $700 from $850. Wall Street disagrees on cycle duration, but bulls have more evidence on their side.
Analysts’ Case: Memory Supply Stays Tight Through 2028 Goldman’s price target increase came as the CEO said memory supply should stay tight through 2028. Q4 revenue reached $54.2 billion, up 31% sequentially and 379% year over year, making it the sixth consecutive record quarter. Non-GAAP EPS of $33.42 beat consensus of $31.35, and gross margin reached 87%, up 210 basis points sequentially.
More than 75% of 2027 output is committed. 26 strategic customer agreements cover over 35% of revenue through 2030, with some extending into 2031. Remaining performance obligations total about $150 billion. CFO Mark Murphy said, “Even at floor prices, we expect margins meaningfully above any prior cycle peak margins.”
Company Snapshot: A Record Year Built on AI Micron makes DRAM and NAND memory. Fiscal 2026 revenue rose 256% to $133.2 billion, and EPS came in at $75.52. Q4 Data Center SSD revenue was nearly $10 billion. Most calendar 2027 HBM supply has been sold at higher prices. Fiscal Q1 guidance: revenue of $61.5 billion ± $1.5 billion, gross margin of about 86.25%, and EPS of $38.15 ± $1.00.
Why the Move Matters Now Higher prices drove most of Q4’s gains. DRAM revenue rose 27% while bit shipments grew only in the mid single digits. NAND revenue climbed 42% on price increases of about 30%. Investors are pricing this as a peak that fades once supply catches up.
Management argues catch-up is a long way off. Significant new cleanroom capacity does not arrive until late calendar 2028, and gross margins are expected to rise after Q1. Real risks remain: first-half fiscal 2027 capex is about $25 billion, startup costs are climbing, and Netlist has filed an ITC complaint seeking a ban on Micron’s HBM imports. Yet shares trade at about 7 times forward earnings.
What It Means for Your Portfolio If Micron maintains forward EPS of around $200 and the market applies 10x instead of 6x, that points to a $2,000 stock. Starting December 9, 2026, Micron plans to return 100% of excess cash to shareholders and pays a $0.15 quarterly dividend. With a beta of 2.222, expect sharp moves. Watch whether Q1 margins hold, how many new SCAs are signed, and the next buyback authorization size.
Contact [email protected] for any questions or corrections.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Micron Technology, Inc. (NASDAQ:MU) has reached a point where the value of memory its customers have already committed to buy is larger than everything the company sold in its entire latest financial year.
The chipmaker said Sept. 30 that it now has about $150 billion in remaining performance obligations tied to 26 long-term customer agreements.
Micron generated $133.2 billion in total revenue in fiscal 2026, meaning its contract book is already about 13% larger than a full year of revenue.
That Doesn’t Mean Micron has $150B in the BankThe figure represents revenue Micron expects to recognize in the future as it supplies memory under those agreements. In other words, it is a measure of committed future business rather than cash already collected.
But these are more than loose customer forecasts.
Micron said all 26 agreements include take-or-pay volume commitments, requiring customers to buy agreed amounts or face contractual consequences. The agreements now cover more than 35% of Micron’s estimated revenue through 2030.
For a memory business long known for violent boom-and-bust cycles, that is a remarkable amount of future demand already under contract.
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Another Important WrinkleMicron calculates the $150 billion figure using minimum pricing where pricing frameworks are already set. The company said actual revenue generated over the life of the agreements is expected to be higher.
That means the $150 billion should not necessarily be viewed as a ceiling on the revenue associated with these contracts.
The agreements also give Micron something that memory companies have historically lacked: greater visibility into future demand. Instead of relying entirely on spot-market conditions and customers’ changing purchasing plans, a significant portion of Micron’s future memory sales is now tied to contractual commitments.
Memory Market in High-Demand, AI EraAI infrastructure requires enormous amounts of memory, and customers are increasingly securing supply in advance. Micron’s long-term agreements suggest that some of that demand is moving from forecasts into contractual commitments.
For investors, the bigger takeaway is not that Micron has suddenly booked $150 billion in revenue. It is that future memory demand is becoming visible on Micron’s books at a scale larger than the company’s entire fiscal 2026 revenue base.
The next question is how much of that contracted demand ultimately translates into revenue, and at what pricing and margins. But for a memory business accustomed to sharp cycles, having more than $150 billion in future obligations already on the books changes investors’ visibility into the cycle ahead.
Markets inched higher heading into Thursday's trading session after Micron (MU) showed lasting earnings strength supporting the AI trade. However, Tom White points out concerns on the macro front he sees hitting a concentrated stock market.
