Micron’s massive memory money making machine

Memory becoming a strategic asset in this period of accelerated ASI demand has sent Micron revenues up into the stratosphere, and it expects more of the same in the next quarter.

The company earned an enormous $23.68 billion in revenues in its second fiscal 2026 quarter, ended February 26, 194 percent higher, almost 3x more than the year-ago $8.05 billion. Its near-extraordinary GAAP profit of $13.79 billion was, get this, 771.3 percent more than last year and more than the prior quarter’s $13.64 billion in revenue; as the huge rise in demand for GPU high-bandwidth memory (HBM) and its short supply has been used to raise prices. Fab capacity shortages have also caused shortages followed by lesser price rises for ordinary DRAM as well as NAND.

Sanjay Mehrotra, Micron’s Chairman, President and CEO, said: “Micron set new records across revenue, gross margin, EPS, and free cash flow in fiscal Q2, driven by a strong demand environment, tight industry supply, and our strong execution, and we expect significant records again in fiscal Q3,” 

Financial summary

• Gross margin: 74.4% vs 36.8% last year.
• Operating cash flow: $11.9 billion vs $8.41 billion for the prior quarter and $3.94 billion for the same period last year.
• Free cash flow: $6.9 billion vs prior quarter’s $3.9 billion
• Diluted EPS: $12.07 vs year-ago $1.41
• Cash, marketable investments, and restricted cash: $16.7 billion.

A 2016 - 2026 chart shows the remarkable revenue and net income increase in this second quarter of what is being called a memory super cycle, as it is so much larger than previous peaks in the traditionally cyclic glut-to-gloom memory industry; 

Micron has three main fabricated product groups; HBM, DRAM, and NAND. DRAM revenues were $18.8 billion, up 207 percent year/year and 79 percent of Micron’s total revenues. NAND brought in $5 billion, with a 169 percent Y/Y rise, now being 21 percent if its full revenues.

It doesn’t provide HBM revenue numbers but did say that its HBM business is progressing well; it began volume shipments of its HBM4 36GB 12-Hi, designed for Nvidia’s Vera Rubin, in the first calendar 2026 quarter. Micron says that it’s sampled its HBM4 16-high product, which provides 48GB of HBM capacity in each HBM cube. Its development of next-gen HBM4E “is well underway, and we expect to ramp volume in calendar 2027 … and is set to deliver another step-function improvement in performance, enabling a whole new generation of AI compute platforms across the industry.”

It notes that the “Rapid growth in AI inference is driving the emergence of new architectures optimized for the token economics of specific workloads.”

NAND sales are increasing, although not as much as DRAM, due to: “an acceleration in NAND bit demand in the data center due to AI use cases such as vector database and KV cache offload, and due to [the] growing share of SSDs in capacity storage tiers.” For example: “Our 122TB high-capacity SSD is seeing strong adoption and delivers 16 times the sequential read throughput per watt of a capacity-matched HDD configuration.”

NAND is increasingly supply-limited: “We are now seeing NAND demand significantly in excess of our available supply for the foreseeable future. In calendar 2026, a number of factors, including DRAM and NAND supply constraints, could cause PC and smartphone units to decline in the low-double-digits percentage range.”

The products are sold into market sectors by four business units and their revenue growth numbers were:

• Cloud memory BU: $7.75 billion, up 162% Y/Y
• Core Data Center BU: $5.7 billion, up 210%
• Mobile and Client BU: $7.7 billion, up 245%
• Automotive and Embedded BU: $2.7 billion, up 162%

A chart shows the changes;

It’s surprising that, with AI memory demand concentrated in the hyperscaler and enterprise data center areas, the mobile and client BU’s revenues are almost as high as the cloud BU, having shot up 245 percent Y/Y. Micron says “PCs with on-device agentic AI capabilities have recommended memory specifications of at least 32GB, twice as much as the average PC.” And “the fast-growing new category of personal AI workstations, such as Nvidia DGX Spark and AMD Ryzen AI Halo, come in 128GB configurations, ideal for using large language models on device.”

The AI influence extends to smartphones: “The mix of flagship smartphones shipping with 12GB or more of DRAM increased to nearly 80 percent in calendar Q4, up from under 20 percent a year ago.”

The automotive and embedded market is growing more slowly, but: “As more advanced ADAS and smart cabin adoption scales, we expect robust long-term growth in automotive memory demand.”

Also robotics could become much more important, with Micron saying: “Rapid improvements in AI are supercharging the capabilities of robots. We believe we are on the cusp of a 20-year growth vector in robotics and expect robotics to become one of the largest product categories in the technology world. Humanoid robots will be AI-enabled and will be powered by a compute platform that rivals that of a high-end L4-capable automobile, thus requiring significant memory and storage capacity.”

Customers and Micron want to secure supply and production continuity and SCAs (Strategic Customer Agreements), specific commitments over a multi-year time horizon for improved visibility and stability, are lengthening. It has just signed its first five-year SCA.

Micron is adding fab capacity but this is going to come on stream in 2027 and 2028; there is no short term fix. It has bought a Tongluo DRAM fab site from Powerchip Semiconductor, and expects meaningful product shipments beginning in late calendar 2027. Also “We continue to expect initial wafer output at our first Idaho fab in mid-calendar 2027, and ground preparation has begun for our second Idaho fab.”

NAND fabbing expansion is in the same situation. Micron has a new NAND fab at its Singapore site and expects initial wafer output from this fab in the second half of calendar 2028.”

All of which means this money-making boom is set to continue and, in fact, accelerate. Next quarter’s outlook is for revenues of $33.5 billion ± $750 million, a 260 percent Y/Y rise at the mid-point; Mehrotra saying: “Our fiscal Q3 single-quarter revenue guidance exceeds the full year revenue for every year in our company’s history through fiscal 2024. … we anticipate exceptional records across revenue, gross margin, EPS and free cash flow.”

Mehrotra also said: “Reflecting confidence in the sustained strength of our business, our board has approved a 30 percent increase in our quarterly dividend.”

Comment

Micron has no direct involvement in the high-bandwidth flash technology developments being developed by SK hynix, Sandisk, Kioxia and others. We would expect Micron to become involved once Nvidia signals it is fully on board with HBF technology.