Amidst a feast of storage: Micron (MU.US) is paying the bill for the next downturn.

Notice that Micron Technology, Inc. (MU.US) has benefited from severe shortages of DRAM and NAND flash memory, driving up demand and prices. In the past six months, prices in the DRAM and NAND spot markets have increased by 5.5 times and nearly 4 times, respectively, bringing huge demand and price hikes to Micron in the DRAM and NAND sectors. Surge in Demand CEO Sanjay Mehrotra stated on the Q2 FY2026 earnings call, "As artificial intelligence evolves, we expect computing architectures to become increasingly reliant on memory. For this reason, we firmly believe that Micron is one of the biggest beneficiaries and enablers in the field of artificial intelligence. Artificial intelligence not only increases the demand for memory, but also fundamentally reshapes the strategic asset status of memory in the era of artificial intelligence." It is expected that the memory market shortage will worsen in the remaining time of this year, with prices expected to increase by 60%. This will lead to explosive revenue growth expectations. As customers rush to ensure long-term memory supply, Micron has benefited from locking in multi-year supply agreements through Strategic Customer Agreements (SCAs), unlike the typical one-year agreements (LTAs). Mehrotra explained, "SCA is a multi-year agreement... LTAs are typically one-year agreements... in the current environment where the outlook for supply in the foreseeable future is extremely tense... our customers are very actively engaging with us to sign these structural strategic agreements for their own planning and predictability... the real purpose of these agreements is to bring stability and higher transparency to our business model." Gross Margin May Peak Micron Technology, Inc.'s gross margin has been soaring, with expectations for the next quarter suggesting it will further increase to over 80%, reaching a historic high. This reflects higher prices, favorable product mix, and lower costs, but as Micron may be nearing a profit margin peak, the gross margin may return to normal. However, concerns are growing that the company's profit margin may have already peaked, with the next step potentially falling by about 1000 to 2000 basis points. The cause for this concern is that, based on signs from semiconductor companies like Applied Materials (AMAT.US), the incremental demand for storage chips such as NAND may be lower than expected. Bank of America Corp analyst Vivek Arya stated, "The NAND flash market continues to benefit from expected growth in data center products (such as eSSD, NVIDIA CorporationKV cache offload, etc.), but according to Applied Materials data, the demand from KV cache may only account for single-digit percentage of the NAND flash total market size. Similarly, Micron's Q3 gross margin expectation is 81.0%, possibly approaching a cycle peak, eventually stabilizing around the historical high of 60-70% before the era of artificial intelligence." Sharp Rise in Capital Expenditure Micron's capital expenditure plans for FY2026 and FY2027, including the Copper Lu factory in Taiwan and new factories in the U.S., indicate its exceptionally aggressive new project expansions, increasing its risk of long-term excess capacity compared to its memory industry peers. In terms of numbers, Micron has revised its capital expenditure forecast for FY2026 (ending August 2026) from $200 billion to $250 billion, with an expected additional $10 billion in capital expenditure over the next year due to expansion of wafer fabs in the U.S. and other regions. Despite strong profit growth expectations, Micron's expected EV/EBITDA multiple is lower than its historical median, forming a notable but cyclically sensitive valuation structure. Conclusion Technical indicators show that Micron Technology, Inc. is in a strong uptrend, but the current stock price is trading in a range, which means investors can hold current positions and wait for more significant breakthroughs before increasing investment. Currently, the strong demand for Micron's memory is partly offset by the risks brought by peak gross margins and extremely aggressive capital expenditures.