Memory chips used to be the boring part of tech. Not anymore. Micron reported earnings last night and the numbers barely looked real - revenue quadrupled to $41.5 billion, EPS of $25.11 beat estimates by 24%, and gross margins hit 84.9%, surpassing even NVIDIA. Next quarter guidance of $50 billion crushed the $43 billion consensus by 16%.
The same day the stock surged, Apple raised Mac and iPad prices by $100 to $500 per device, blaming a memory shortage Tim Cook called a “hundred-year flood.” Microsoft hiked Xbox prices for the third time in a year. The downstream proof of Micron’s pricing power is showing up in every electronics aisle.
The stock is up over 300% this year and just hit a new all-time high above $1,250. Micron’s entire 2026 HBM supply is sold out, with $100 billion in long-term customer commitments locked in.
Micron has crashed 50% or more four times since 2008. This cycle just keeps accelerating.
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Revenue quadrupled to $41.5 billion with record gross margins of 84.9% - higher than NVIDIA. EPS of $25.11 beat by 24%, and next quarter guidance of $50 billion topped consensus by 16%. Micron generated $18.3 billion in free cash flow in a single quarter. Apple and Microsoft both raised device prices this week citing memory shortages, proving the pricing power is real and downstream.
AI has turned memory from a commodity into the scarcest resource in tech. Micron’s entire 2026 HBM supply is sold out, with 16 strategic agreements carrying roughly $100 billion in cumulative commitments and $22 billion in customer deposits. Data centers now consume an estimated 70% of all DRAM produced worldwide. Only three companies on Earth make HBM.
At ~8.5x forward earnings, Micron trades at a fraction of most AI plays despite posting the highest margins in semiconductors. Analysts rate it a strong buy with an average target around $1,527, implying roughly 26% upside. The company retired $4.4 billion in debt during Q3 and sits on $30 billion in cash and investments.
The current memory upcycle has run roughly 30 months, matching the longest on record. The industry is spending $145 billion on wafer fab equipment in 2026, and Micron’s own Idaho fab comes online mid-2027. When the last cycle turned in 2018, Micron went from record margins to losing 57% of its value in under a year.
Trailing P/E sits at 57x against a 10-year average of 19.5x. The forward multiple only works if peak margins hold, and 84.9% gross margins are unprecedented in memory history - the prior peak was 58.9% in 2018. CEO Sanjay Mehrotra has sold over $100 million in Micron stock over the past two years. Not a single insider has bought.
The same pricing power driving Micron’s margins is destroying downstream demand. PC shipments are now forecast to fall over 10% and smartphones up to 14% in 2026 as device prices surge. China’s CXMT now holds 7.67% of global DRAM share, up from near zero, pricing aggressively below established players. Goldman Sachs maintains a Neutral rating and warns of potential double-digit HBM price drops.
Revenue quadrupled to $41.5 billion with record gross margins of 84.9% - higher than NVIDIA. EPS of $25.11 beat by 24%, and next quarter guidance of $50 billion topped consensus by 16%. Micron generated $18.3 billion in free cash flow in a single quarter. Apple and Microsoft both raised device prices this week citing memory shortages, proving the pricing power is real and downstream.
AI has turned memory from a commodity into the scarcest resource in tech. Micron’s entire 2026 HBM supply is sold out, with 16 strategic agreements carrying roughly $100 billion in cumulative commitments and $22 billion in customer deposits. Data centers now consume an estimated 70% of all DRAM produced worldwide. Only three companies on Earth make HBM.
At ~8.5x forward earnings, Micron trades at a fraction of most AI plays despite posting the highest margins in semiconductors. Analysts rate it a strong buy with an average target around $1,527, implying roughly 26% upside. The company retired $4.4 billion in debt during Q3 and sits on $30 billion in cash and investments.
The current memory upcycle has run roughly 30 months, matching the longest on record. The industry is spending $145 billion on wafer fab equipment in 2026, and Micron’s own Idaho fab comes online mid-2027. When the last cycle turned in 2018, Micron went from record margins to losing 57% of its value in under a year.
Trailing P/E sits at 57x against a 10-year average of 19.5x. The forward multiple only works if peak margins hold, and 84.9% gross margins are unprecedented in memory history - the prior peak was 58.9% in 2018. CEO Sanjay Mehrotra has sold over $100 million in Micron stock over the past two years. Not a single insider has bought.
The same pricing power driving Micron’s margins is destroying downstream demand. PC shipments are now forecast to fall over 10% and smartphones up to 14% in 2026 as device prices surge. China’s CXMT now holds 7.67% of global DRAM share, up from near zero, pricing aggressively below established players. Goldman Sachs maintains a Neutral rating and warns of potential double-digit HBM price drops.
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Long term, a commodity producer shouldn't be worth such a high multiple of book value. At a $1T+ valuation (market cap) and a $100B equity value on the balance sheet, are they doing something that is going to generate $50-100B/year of cash on this amount of equity for 10+ years so that a "buy and hold forever" investor can break even? I don't think that's likely.
Over time, capacity will be added to the industry and/or demand will respond. Past memory price cycles have been brutal enough that even the mighty TSMC and Intel both had to exit memory. The reason is that as capacity creeps in, and there's any slow down, prices quickly fall as everyone can rationally justify lower prices but a factory filled to capacity in orders - this is better for their financials, makes better use of otherwise idle equipment that has already been bought, and in some cases, it's better for the local economy... As prices fall from let's say, "weaker" competition, it weighs on the entire peer set, and I doubt Micron can escape this.
I have no idea if the trouble scenario is today, tomorrow, 10 years from now, or whenever, but it's best to be careful with a hot commodity producer. Remember there's no free lunch either, and environmental impacts (on health of people nearby) can also pose a risk.
I think it's a *long term* DUD, but I have no clue about the short or medium term.
Crazy to see how the memory shortage is seeping into every day life. Apple price rises, hetzner price rises, etc. I so wish I had bought this last year. Hindsight etc. But I just can't get behind this size of company with these numbers. I'm predicting things will look somewhat different in 12 months once OpenAI and Anthropic get to unload on public markets.