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    Earnings call· May 2026(Q3 FY26)

    MICRON TECHNOLOGY Q3 FY26 earnings call MU

    Jun 24, 2026 Source

    Executive summary

    Micron Technology Q3 FY26 — Record Revenue, Gross Margin, and EPS Driven by AI Demand and Strategic Customer Agreements

    Micron delivered exceptional Q3 FY26 results, achieving record revenue, gross margin, and EPS, significantly exceeding guidance, primarily driven by robust AI demand across all segments. The company announced 16 Strategic Customer Agreements (SCAs) with binding take-or-pay commitments, representing a significant portion of future volume and expected to fundamentally transform its business model by enhancing financial performance durability and predictability. Despite structural supply constraints and rising bit costs, Micron is expanding its global manufacturing footprint and advancing technology nodes to meet insatiable AI-driven memory demand, which is expected to keep the market tight beyond 2027.

    Highlights

    5

    • Achieved record revenue of $41.5 billion, up 74% sequentially and 346% year-over-year.

    • Delivered a record gross margin of 84.9%, representing a 10 percentage point sequential increase.

    • Reported record non-GAAP diluted EPS of $25.11, marking a 106% sequential increase.

    • Data center revenue exceeded $25 billion on an annualized run rate of over $100 billion.

    • Signed 16 Strategic Customer Agreements (SCAs) covering approximately 20% of DRAM volume and 1/3 of NAND volume over 5 years.

    Concerns

    4

    • DRAM and NAND industry demand significantly exceeds supply, with tight conditions expected to persist beyond calendar 2027.

    • Memory process technology is becoming more complex, leading to slower bit growth and increased cleanroom space requirements.

    • Blended DRAM cost per bit is projected to rise from current levels due to technology transitions and greenfield capacity ramps.

    • Operating expenses are projected to increase by approximately $1 billion in fiscal 2027, weighted to the second half.

    Guidance & targets

    15
    CategoryTargetConfidence
    Revenue
    $50 billion, plus or minus $1 billion
    high materiality
    High
    Gross Margin
    approximately 86%
    high materiality
    High
    Operating Expenses
    approximately $1.65 billion
    medium materiality
    High
    Non-GAAP Diluted EPS
    $31 per share, plus or minus $1
    high materiality
    High
    Effective Tax Rate
    around 15%
    medium materiality
    High
    Capital Expenditures
    around $10 billion
    high materiality
    High
    Capital Expenditures
    approximately $27 billion
    high materiality
    High
    Operating Expenses Increase
    approximately $1 billion
    medium materiality
    High
    Quarterly Capital Expenditures
    above fiscal Q4 levels
    high materiality
    High
    Industry Server Units Growth
    high teens percent
    medium materiality
    High
    Industry DRAM Bit Shipments Growth
    low to mid-20s percentage range
    high materiality
    High
    Industry NAND Bit Shipments Growth
    approximately 20%
    high materiality
    High
    Micron DRAM Supply Growth
    approximately in line with the industry supply growth
    medium materiality
    High
    Micron NAND Supply Growth
    somewhat less than the industry supply growth
    medium materiality
    High
    Capital Return Policy
    increase capital return; return 100% of excess cash to shareholders over time
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Cloud Memory Business Unit
    Driven by higher pricing and bit shipments.
    Revenue: recordGross Margin: up 9 percentage points sequentially
    		$13.8 billion—78%83%
    Core Data Center Business Unit
    Driven by higher pricing and a favorable mix.
    Revenue: recordGross Margin: up 12 percentage points sequentially
    		$11.5 billion—103%87%
    Mobile and Client Business Unit
    Driven by higher pricing, partially offset by lower bit shipments; helped by favorable mix.
    Revenue: recordGross Margin: up 9 percentage points sequentially
    		$11.5 billion—49%87%
    Automotive and Embedded Business Unit
    Driven by higher pricing and higher bit shipments; helped by favorable mix.
    Revenue: recordGross Margin: up 11 percentage points sequentially
    		$4.6 billion—71%79%

    Operational metrics

    25
    Total Revenue
    $41.5 billionup 74% sequentially and up 346% year-over-year
    Q3 FY26

    Fifth consecutive quarterly revenue record. $17.6 billion sequential increase is the largest in company history.

    DRAM Revenue
    $31.3 billionup 343% year-over-year, increased 67% sequentially
    Q3 FY26

    Record DRAM revenue.

    DRAM Bit Shipments Growth
    low single-digit percentage rangesequentially
    Q3 FY26
    DRAM Price Increase
    low 60s percentage rangesequentially
    Q3 FY26

    Driven by tight industry conditions and favorable mix.

    NAND Revenue
    $9.9 billionup 361% year-over-year, increased 99% sequentially
    Q3 FY26

    Record NAND revenue.

    NAND Bit Shipments Growth
    mid-single-digit percentage rangesequentially
    Q3 FY26
    NAND Price Increase
    mid-80s percentage rangesequentially
    Q3 FY26

    Driven by tight NAND industry conditions and a favorable mix.

    Non-GAAP Gross Margin
    84.9%up 10 percentage points sequentially, more than doubled from a year ago
    Q3 FY26

    New company record. Improvement driven primarily by higher pricing, strong execution, and favorable mix.

    Operating Expenses
    $1.5 billionup $97 million quarter-over-quarter
    Q3 FY26

    Sequential increase due to higher variable compensation expense.

    Non-GAAP Operating Income
    $33.7 billion
    Q3 FY26
    Non-GAAP Operating Margin
    81.2%up 12 percentage points sequentially and 54 percentage points year-over-year
    Q3 FY26
    Effective Tax Rate
    14.9%
    Q3 FY26

    Taxes were $5.1 billion.

    Non-GAAP EPS
    $25.11up 106% sequentially
    Q3 FY26
    Capital Expenditures
    $7.1 billion
    Q3 FY26
    Cash and Investments Balance
    $30.2 billion
    Q3 FY26

    Record levels at quarter end.

    Total Debt
    $5.7 billionreduced by $4.4 billion during Q3
    Q3 FY26

    Includes $4.3 billion reduction from cash tender offer for senior notes. Weighted average maturity is April 2035.

    Net Cash Balance
    $24.4 billion
    Q3 FY26
    HBM4 Revenue
    over $1 billion
    Q3 FY26

    Shipped already.

    L2+ and above vehicles mix
    over 20%more than doubling this year
    CY26

    These vehicles have over five times the memory and storage content of an average vehicle.

    Humanoid Robots Memory Content
    10 timesvs average L2+ vehicle
    current
    DRAM Inventory Days
    below 120 days
    Q3 FY26

    Very tight.

    Total Inventory
    $8.6 billion
    Q3 FY26
    SCA Cash Deposits and Financial Commitments
    $22 billion
    current

    Associated with agreements signed to date. Overwhelming majority are cash deposits.

    SCA Cash Deposits received
    about $400-plus million
    Q3 FY26
    SCA Cash Deposits expected
    about another $10 billion
    Q4 FY26

    Industry KPIs

    5
    MetricValueDetails
    Backlog order bookapproximately $100 billionUSD
    Ai data center revenueexceeded $25 billionUSD
    Inventory channel inventory$8.6 billionUSD
    Node platform ramp schedule1-gamma DRAM node and G9 NAND node
    End market segment revenue mixCloud Memory Business Unit: $13.8 billion (33% of total); Core Data Center Business Unit: $11.5 billion (28% of total); Mobile and Client Business Unit: $11.5 billion (28% of total); Automotive and Embedded Business Unit: $4.6 billion (11% of total)USD

    Orderbook & backlog

    2
    Remaining Performance Obligations (RPO)over $5 billionend of fiscal Q3

    For SCAs with defined price (fixed or floor/ceiling pricing). Reflects inherently conservative estimates based on minimum committed volumes and minimum pricing. Not indicative of total expected revenue.

    Remaining Performance Obligations (RPO) for 14 of 16 SCAsapproximately $100 billioncurrent (including agreements executed after end of fiscal Q3)

    Determined based on minimum committed volumes and minimum pricing. Expected to well exceed associated RPOs over the term of the agreements. Will be disclosed in the K.

    Product announcements

    2
    ProductTypeDetails
    HBM4 12-highmilestone
    1-alpha DDR4 technologylaunch

    Deals & partnerships

    2
    16 customers across data center, consumer and auto market segmentsBinding take-or-pay agreements for specific volumes of DRAM and NAND over multiyear terms.Approximately $100 billion cumulative revenue at minimum price for 14 of 16 SCAs over remaining agreement term.Typically 5-year term from calendar 2026 through end of calendar 2030; Automotive agreements generally 3-year term.

    Includes four very large customers, three medium-sized customers, and smaller automotive customers. Largest agreements generally have a ceiling price for existing products at current CQ2 market price and a floor price. Approximately 40% of revenue under SCAs expected to have fixed prices or price ceilings at or close to current CQ2 market prices.

    ASMLMultiyear EUV supply agreement.Multiyear

    Supports increased adoption of EUV at the 1-delta node and future generations.

    Capital programs

    6
    Idaho ID1 Fabunderway

    Benefit: U.S. leading-edge DRAM manufacturing

    Construction is well underway.

    Idaho ID2 Fabunderway

    Benefit: U.S. leading-edge DRAM manufacturing

    Construction is well underway.

    New York Fab Clusterunderway
    Start: January this year

    Benefit: U.S. leading-edge DRAM manufacturing

    First of our New York fab cluster where we broke ground in January this year.

    Tongluo, Taiwan Site (Existing Fab)underway

    Benefit: Meaningful product shipments from existing 300,000-square-feet fab

    About a quarter earlier than prior expectations.

    Tongluo, Taiwan Site (Second Cleanroom)underway
    Start: recently begun construction

    Benefit: Similar-sized second cleanroom to support EUV equipment

    Adding to the existing fab.

    Singapore Advanced Packaging Facilityunderway

    Benefit: Contribute meaningfully to Micron's HBM packaging capacity

    Will become another center of excellence for advanced packaging.

    Risks & headwinds

    5
    DRAM and NAND industry demand continues to significantly exceed industry supply.Beyond CY27

    Tight conditions to persist beyond calendar 2027.

    Mitigation: Comprehensive efforts to increase supply, including greenfield fab expansions, collaboration with suppliers to accelerate tool acquisition and installation, and technology transitions.

    Memory process technology is getting more complex with every new node.Ongoing

    Driving slower bit growth over time; wafer growth needs significantly increasing cleanroom space and greenfield fab requirements; HBM's growth and increasing trade ratio further pressures non-HBM supply.

    Mitigation: Leveraging leadership DRAM and NAND nodes, developing next-generation nodes, expanding global manufacturing footprint.

    Blended DRAM cost per bit to rise from current levels.Future

    Due to transitions like LP5 to LP6, DDR5 to DDR6, newer HBM generations (rising bit costs) and ramp of significant greenfield capacity.

    Mitigation: Customer SCAs provide for appropriate price premiums for new products to be negotiated in the future.

    Operating expenses projected to increase.FY27, weighted to H2

    Approximately $1 billion in fiscal 2027.

    Mitigation: Expansion of R&D to support unprecedented opportunities in memory and storage.

    Impacts due to trade or geopolitical developments.Ongoing

    Not included in guidance.

    Mitigation: N/A (implicitly, company monitors and adapts)

    What to watch in Q4 FY26

    5

    SCA Cash Deposits

    Q4 FY26
    Currentabout $400-plus million received in Q3 FY26
    Targetabout another $10 billion received in Q4 FY26

    Why it matters

    These deposits are a key financial commitment from customers under the new Strategic Customer Agreements, indicating the strength and binding nature of the deals, and will significantly impact Micron's balance sheet.

    We received about $400-plus million in the third quarter. We'll receive about another $10 billion in the fourth quarter.

    Q&A highlights

    8

    Clarification on the $100 billion cumulative revenue at floor price vs. 40% of revenue under SCAs, and how much revenue per year is guaranteed at a floor price.

    Sanjay explained that the $100 billion RPO is a minimum at the floor price, which is an accounting measure, and actual revenue is expected to be much higher. He reiterated that 20% of DRAM and 30% of NAND volume (about 25% of total revenue) is covered by SCAs so far. Mark added that the RPO is a minimally contractually enforceable amount and will change each quarter.

    “RPO at the floor price is to be reported as an accounting measure, but we fully expect that the revenue will be much higher than that.”

    asked by Timothy Arcuri · answered by Sanjay Mehrotra

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Customer Agreements (SCAs) Transformation

    Micron has signed 16 SCAs, fundamentally transforming its business model. These agreements, typically 5-year terms (2026-2030), cover approximately 20% of DRAM volume and 1/3 of NAND volume. They are structured as take-or-pay with binding commitments, providing supply assurance to customers and enhancing Micron's long-term financial performance, margins, and free cash flow visibility. Approximately 40% of future revenue is expected to be under SCAs with fixed prices or price ceilings at current CQ2 market prices, and floor prices well above past peak margins.

    02

    AI-Driven Demand and Structural Supply Constraints

    The memory industry is undergoing structural transformation due to AI proliferation, driving unprecedented🌐 demand across data centers, smartphones, PCs, automotive, and robotics. Data center DRAM and NAND bit shipments are expected to more than double from 2024 to 2026. However, supply shortages are expected to persist beyond calendar 2027 due to complex technology transitions, increasing cleanroom space requirements, long fab construction lead times, and HBM's high wafer consumption.

    03

    Technology Leadership and Product Ramps

    Micron's 1-gamma DRAM and G9 NAND nodes are ramping well and are on track to become the highest volume nodes. Development of next-generation nodes is progressing for volume production in H2 CY27. HBM4 12-high volume ramp is tracking twice as fast as HBM3E 12-high, with over $1 billion in HBM4 revenue already shipped. The company expects future memory demand to skew towards higher performance, higher value products with rising bit costs.

    04

    Global Manufacturing Footprint Expansion

    Micron is making significant investments in U.S. leading-edge DRAM manufacturing with ID1 (first wafer output mid-CY27) and ID2 (late CY28) fabs in Idaho, and a new fab cluster in New York. The newly acquired Tongluo site in Taiwan will support meaningful product shipments from an existing fab by mid-CY27 and has begun construction of a second cleanroom for EUV equipment. Singapore will become another advanced packaging center of excellence by H1 CY27.

    05

    End-Market Trends and AI Impact

    AI is reshaping data center infrastructure, driving high-teens growth in CY26 industry server units. Agentic AI platforms are elevating edge devices, expected to drive memory demand growth in PCs and smartphones. In automotive, L2+ and above vehicles are projected to exceed 40% of the mix by 2030, significantly increasing memory and storage content. Humanoid robots are also identified as a substantial multi-decade memory demand driver starting later this decade.

    AI-generated summary of the company’s earnings call. Not investment advice.