Micron Technology, Inc. (MU.US) exploded in Q3 with revenue increasing over three times and a gross margin of 84.9%, surpassing NVIDIA Corporation. Meta dominates the tech industry.

After the market closed on Wednesday, Micron Technology, Inc.(MU.US) released its financial report for the third quarter of the 2026 fiscal year ending on May 28th. The strong data surprised Wall Street. The company not only exceeded revenue and profit expectations by a large margin, but its adjusted gross margin soared to a historical high of 84.9%, surpassing giants in AI computing power and internet like NVIDIA Corporation(NVDA.US), Meta(META.US), and becoming the "profit margin king" among large technology stocks in the United States. Boosted by this news, Micron's stock price surged more than 16% in after-hours trading, with a total market value firmly above a trillion dollars. This financial report is not just a report card, but a declaration about the future competition landscape of AI infrastructure: the one who has the memory will conquer the world, and the tense supply situation will not see relief until 2028. The "violence aesthetic" of financial data: not just exceeding expectations, but creating history If general financial reports exceeding expectations "beat" Wall Street, Micron's performance this quarter can be called "crushing" - Micron achieved a revenue of $41.46 billion in the third quarter, a year-on-year increase of 346% and a quarter-on-quarter growth of 74%. This number far exceeded analysts' expectations of $35.69 billion and also set a record for Micron's fifth consecutive quarter of record revenue. In terms of profitability, the company's performance was even more astonishing: the adjusted earnings per share reached $25.11, surpassing the market consensus of $20.49 by $4.62. Net profit also increased by over 100%, rising to $28.24 billion. However, what made the market boil was the leap in gross margin. From 74.9% in the previous quarter, Micron's gross margin this quarter soared to 84.9%, more than doubling year-on-year. For comparison, social media giant Meta's gross margin in the latest quarter was 81.9%, and AI chip leader NVIDIA Corporation was at 75%. This means that Micron's profitability has reached the highest peak in the U.S. technology industry. "We are in the early stages of a structural shift." Micron CEO Sanjay Mehrotra said in a conference call, "AI system performance relies on the performance of the memory subsystem. Memory has shifted from being an accessory in the past to the core engine that determines productivity in the AI era." Supply crisis: a shortage with no end in sight The underlying logic of Micron's explosive performance is extremely simple: the demand tsunami triggered by AI has hit a structural supply bottleneck in the storage industry. As large cloud service providers and computing centers frantically purchase high-bandwidth memory (HBM) to adapt to next-generation AI accelerators from NVIDIA Corporation and others, global storage wafer capacity has been severely constrained. Micron's CEO Mehrotra sent a suffocating signal to downstream manufacturers in a conference call: "We currently see no clear timeline for memory supply to catch up with the increasingly growing demand (No line of sight)." After experiencing years of industry cyclical downturns, storage manufacturers are demonstrating extreme restraint in expanding production. Although Micron has announced extensive construction projects in states like Idaho, New York, Singapore, and Taiwan, the construction period for wafer fabs is extremely lengthy. Mehrotra pointed out that due to shortages of skilled workers, complex environmental permit approvals, and lagging green energy infrastructure, the improvement in supply will be an extremely slow process. The company forecasts that even as supply gradually improves by 2028, the market will remain in an "extremely tight" state for a considerable period after 2027. This imbalance is directly reflected in prices. The financial report shows that Micron's average selling price of DRAM rose by over 60% quarter-on-quarter, while NAND flash pricing surged by over 80%. Despite this, downstream customers still have to accept this "seller's market" pricing system, because without memory, even the most expensive GPU is just a pile of scrap metal. The consumer electronics market is hit the hardest, with Apple Inc. CEO Tim Cook recently stating in an interview that the cost pressure from the current memory shortage is "unsustainable" and has forced Apple Inc. to once again raise prices on some of its end devices. The ultimate evolution of the business model: from the fate of cyclical stocks to securing the "cash cow" If record-breaking revenue and gross margin represent Micron's present, then the management's announcement of "strategic customer agreements" locks in Micron's brilliance for the next five years. For a long time, the memory chip industry has been labeled as "cyclically strong," with prices fluctuating greatly and manufacturers' profitability being very unstable. To break this fate, Micron is leveraging the current supply crisis to forcefully implement a new business model transformation. The company announced that it has signed long-term strategic customer agreements (SCAs) with 16 core customers, including data center giants, consumer electronics giants, and automakers. This is a disruptive redistribution of benefits. Mehrotra revealed that these agreements cover about 20% of the company's DRAM shipments and one-third of its NAND shipments, and are all binding agreements with fixed terms. More surprisingly, these agreements include a price floor. Even if market supply and demand relationships ease in the future and chip prices fall, Micron can ensure that its gross margin remains "far higher than peak levels in any previous cycle." In exchange for Micron's commitment to stable capacity supply, these customers not only need to provide long-term orders but also tangible cash. Micron CFO Mark Murphy revealed that just the agreements currently signed are expected to bring the company $22 billion in customer cash deposits and letter of credit commitments, with the majority being cash deposits. This substantial amount is not considered as prepayments, nor included in revenue, but serves as "security deposits" for the customers to fulfill their contracts, which Micron will hold for the long term until returned at the end of the contract period. "Remaining performance obligations (RPO) is a key indicator." Murphy pointed out that with the inclusion of new agreements, Micron's RPO has soared to around $100 billion, an astronomical figure. He specifically emphasized that this is a conservative amount calculated based on minimum commitment levels and minimum pricing. The company's actual recognized revenue will be much higher than this figure. This means that even without accounting for potential new orders, Micron's revenue bottom line for the next five years is firmly locked in. Wall Street analysts commented that this fundamentally changes the investment logic of the memory chip industry. Daniel Newman, CEO of research firm Futurum Group, bluntly stated, "The scale and speed of AI infrastructure construction have been underestimated at every stage, and with memory chips in short supply, they will continue to enjoy premium pricing rights." HBM4 competition and hidden concerns of a trillion-dollar empire As a core supplier of HBM memory to NVIDIA Corporation, Micron's progress in cutting-edge products is also highly anticipated. Mehrotra confirmed that the company's latest HBM4 12-layer stacked memory has twice the ramp-up speed of the previous generation HBM3E 12-layer stack and has already generated over $1 billion in revenue from HBM4. While SK Hynix is currently the leader in the HBM market share, Micron is trying to capture at least a share matching its overall market share in the DRAM segment in this niche market by relying on its advantages in U.S. manufacturing and deep customer ties. However, beneath the price enthusiasm and city-wide praise, risks are quietly lurking. First is the pressure of capital expenditures. To support the trillion-dollar customer commitments, Micron is forced to engage in an "arms race." The company expects capital expenditures of up to $10 billion in the fourth quarter, totaling $27 billion in the 2026 fiscal year. Although Micron holds over $30 billion in cash investments and has a net cash position of $24.4 billion, the massive factory construction expenses may still put pressure on short-term free cash flow. Additionally, CFO Murphy also warned that while the gross margin is expected to further increase to around 86% in the fourth quarter, the rate of price increases is currently "moderating," which means the space for significant further increase in profit margins is narrowing. Second is the "double-edged sword" effect of long-term agreements. Jack Bihan, Director of Capital Markets at Direxion, pointed out that Micron's current bull market logic is entirely based on "supply shortage." "Any relief in supply could actually be detrimental to Micron. The bullish logic is based on supply constraints, and once supply begins to recover, pricing power will be the first to be threatened." Finally, the complexity of political matters with GEO Group Inc. As one of the very few companies attempting large-scale reshoring of advanced DRAM manufacturing facilities back to the United States, Micron's factory construction costs are significantly higher than those of competitors in East Asia. Finding a balance between maintaining high margins and heavy asset investments is the ultimate test of the management's execution capabilities. As of the overnight close, Micron's stock price has already accumulated over a 700% increase in the past 12 months, jumping from the hundred-billion-dollar level to the trillion-dollar club. In this AI-driven era of technology, Micron is no longer the supporting role hiding behind NVIDIA Corporation's aura. As analyst Medhi Houssaini of Susquehanna put it, "For 30 years, the storage industry has never been so triumphant. When the 'memory wall' becomes a reality, customers have no choice but to pay a premium."