Micron Technology (MU) delivered one of the most explosive earnings reports in semiconductor history for its fiscal third quarter, posting a massive 346% year-over-year revenue surge to $41.46 billion and shattering Wall Street estimates. The beat is powered by a structural memory supercycle, with skyrocketing AI and data center demand for DRAM and High-Bandwidth Memory (HBM).
Micron, a key supplier for Nvidia's AI processors, has benefited from the shortage. The company, the only US-based manufacturer of high bandwidth memory chips used alongside Nvidia's AI processors, has seen demand for these chips far outstrip its production capacity, allowing the company and rivals SK Hynix and Samsung Electronics to charge a premium for their products.
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Hynix is also exploring a US listing, underscoring investor efforts to tap into the AI-driven memory surge. "We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments coupled with structural supply constraints," Micron CEO Sanjay Mehrotra said. He added that the company does not have a sense of when memory supply will catch up with increasing demand.
The chipmaker also outlined a business model shift aimed at making demand less cyclical. The $22 billion in commitments will come from 16 ​strategic customer agreements Micron has signed, spanning data center, consumer and automotive markets, with take-or-pay commitments, cash deposits and pricing floors designed to lock in supply and protect margins.
Micron also said that remaining performance obligations - a key indicator of future contracted revenue - for the customer agreements it has entered into so far are around $100 billion. Micron's stock has surged more than threefold this year, despite a 13% plunge on Tuesday as part of a broader selloff, boosting its market value to over $1 trillion.
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Micron intends to increase its capital return, while it invests heavily in expanding infrastructure to satisfy soaring demand. The company expects fourth-quarter capital expenditure of around $10 billion, while analysts expected $8.89 billion. The company reported adjusted profit of $25.11 per share, compared with estimates of $20.78 per share. It expects fourth-quarter adjusted earnings per share of $31, plus or minus $1, compared with the estimates of $25.84 per share.
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