Micron announced on September 30 that its revenue for the fourth quarter of fiscal year 2026, as of September 3, was $54.23 billion, a year-on-year increase of 379%. The adjusted earnings per share were $33.42, both exceeding market expectations. The company expects revenue in the first quarter of fiscal year 2027 to be between $60 and $63 billion and stated that demand for artificial intelligence continues to drive up the demand for memory chips. It is anticipated that supply and demand conditions will become even more tight in fiscal years 2027 and 2028.

Revenues and profits reach new highs, with gross margin rising to 87%

Micron's revenue in the fourth fiscal quarter increased by approximately 31% compared to the previous quarter, and adjusted earnings per share grew by about 33% from $25.11 in the previous quarter. Based on U.S. Generally Accepted Accounting Principles (GAAP), the net profit for that quarter was $37.7 billion, with diluted earnings per share at $32.87.

The market previously expected its revenue to be around $51.33 billion, with an adjusted earnings per share of $31.72. This performance also marks the seventh consecutive quarter for Micron to achieve year-over-year triple-digit growth in adjusted earnings per share.

Profitability has improved simultaneously. In the fourth fiscal quarter, the adjusted gross margin reached 87%, higher than 84.9% in the previous quarter and 45.7% in the same period last year. Annual revenue amounted to $133.19 billion, an increase of approximately 256% compared to $37.38 billion in the previous fiscal year.

Quarterly comparisons are also affected by the financial calendar: Micron's fiscal year 2026 consists of 53 weeks, with the fourth quarter comprising 14 weeks, one week more than in the same period of the previous year.

Data center demand and storage prices are both driving growth.

Micron reveals that in its fourth fiscal quarter, DRAM revenue amounted to approximately $39.8 billion, accounting for 73% of total revenue, with a quarter-on-quarter increase of 27%. Among this, shipments increased by a mid-single-digit percentage, and prices rose by nearly 20%. NAND revenue was around $14.1 billion, with a quarter-on-quarter increase of 42%, shipments grew by about 10%, and prices increased by about 30%.

Data center business continues to expand. Cloud storage business and core data center business generated revenues of $16.28 billion and $18 billion respectively in the quarter, accounting for approximately 63% of total revenue. Among them, the revenue from core data center business increased by about 56% quarter-on-quarter.

The revenue growth of high-bandwidth memory (HBM) has exceeded the company's overall revenue growth rate. Micron stated that it has reached agreements for the majority of the HBM supply for the fiscal year 2027, with related prices significantly higher than last year.

CEO Sanjay Mehrotra stated that since the last financial report conference call, industry demand has further increased, and the company expects that the supply and demand for memory and storage products in the fiscal years 2027 and 2028 will be more tight than in fiscal year 2026.

New fiscal quarter revenue is expected to continue to grow, with gross margin experiencing a temporary decline.

Micron expects revenue of $61.5 billion in the first quarter of fiscal year 2027, with a range of plus or minus $1.5 billion; adjusted earnings per share to be $38.15, with a range of plus or minus $1. Based on the median of the guidance, revenue is expected to grow by about 13.4% compared to the fourth fiscal quarter.

The company expects the adjusted gross margin for the new fiscal quarter to be around 86.25%, a decrease of 0.75 percentage points from the fourth fiscal quarter. Chief Financial Officer Mark Murphy explained that the guidance reflects an increase in costs of about $1 billion, including incentive compensation previously recorded as inventory, capacity startup costs, and other expenses.

Murphy stated that the first fiscal quarter is expected to be the low point for gross margin in the 2027 fiscal year, after which it is anticipated that the gross margin will improve as prices continue to rise.

Long-term agreement lock-in requirements, expansion of production capacity investment

To improve the predictability of future revenue, Micron has signed 26 multi-year strategic customer agreements that include commitments regarding the quantity of goods to be picked up or payments to be made by customers. The company estimates that these agreements cover more than 35% of the expected revenue up to 2030, with approximately three-quarters of that revenue being subject to a clear pricing framework.

At the same time, Micron plans to increase its capital expenditures for the fiscal year 2027, mainly to accelerate the construction of cleanrooms. The company expects capital expenditures of about $25 billion in the first half of the fiscal year, with even higher expenditures in the second half.

The existing performance has provided financial support for capacity expansion. Micron's net capital expenditure in the fourth fiscal quarter was $10.77 billion, and its adjusted free cash flow was $33.2 billion. The company received approximately $12.75 billion in funds through customer contract guarantees throughout the year. Meherotra stated that strategic customer agreements have enhanced the company's confidence in the sustainability of its financial performance.

Responsible Editor: Long Yunxiang