Micron Technology (MU) Q4 2026 earnings review
Micron's slowdown is a calendar quirk; its factory bill isn't
Micron, the maker of memory chips for AI servers, phones and PCs, kept raising prices in a short market. Sales rose 31% from last quarter, helped by an extra week. By our math, sales per week grew about 21%, and the outlook points to about 22% next. Nearly all of it came from price, not volume.
| Sales per week, growth from last quarter | +21% +31% as reported, in a 14-week quarter |
|---|---|
| Revenue | $54.2B +379% from a year ago |
| Profit per share, excluding one-offs | $33.42 $3.03 a year ago |
| Next-quarter sales outlook | $61.5B about 22% more per week, by our math |
⚖️ Verdict: 🟢 Bullish
The story got better: the shortage now has a longer runway and customers' money behind it. Management sees tight supply through 2028, and customers have committed $32 billion. One caution: profit margins dip next quarter for the first time in this run, and factory spending is about to climb.
The question now is whether today's prices last long enough to pay for the factories Micron is building. Either the shortage runs into 2028 and new plants open into a hungry market, or supply catches up sooner and prices fall after the money is spent. The next two quarters of price increases will tell.
🐂 Bull Case
Without the Extra Week, Growth Isn't Slowing
Micron's growth looks like it is slowing, but most of that is the calendar. The quarter ran 14 weeks, one more than usual, which flatters it and makes the next one look weak.
- Sales growth from last quarter: 31% as reported, about 21% per week by our math
- Next quarter's outlook: 13% as reported, about 22% per week by our math
- Price of DRAM, the working memory in computers: up in the high teens
- Price of NAND, the flash storage chips: up about 30%
Price did the work. By our math, memory shipped per week was about level, because Micron has no spare factory space. Management now expects supply to stay short through 2028 and sales to rise every quarter this fiscal year.
What to watch: next quarter's sales against the outlook. A result inside the range would say price increases are fading faster than planned.
Customers Are Paying Up Front for Supply
Micron's long-term contracts now come with money attached. Customers have signed 26 multi-year agreements that oblige them to buy or pay anyway.
- Customer commitments: $32 billion, mostly cash deposits
- Share of expected sales through 2030 under contract: over 35%
- Pricing: three-quarters of that has set terms, most with a minimum and a maximum
- HBM, the stacked memory beside AI processors: most of 2027 supply already sold, at higher prices
What to watch: the commitment total each quarter. Management says new agreements are priced higher than earlier ones. A rising total means customers still fear the shortage more than the price.
Storage for AI Is Now a Second Engine
Micron's storage chips have joined its memory chips as a source of growth. Sales of solid-state drives to data centers were nearly $10 billion, more than ten times the year-ago level.
- NAND sales: $14.1 billion, up 42% from last quarter
- Data-center drives: over two-thirds of NAND sales
- Core Data Center unit: $18.0 billion, up 56% and the largest of four units
- Core Data Center gross margin: 90%, against 41% a year ago
What to watch: whether this unit keeps outgrowing the rest of Micron. Its NAND supply is growing more slowly than the industry's, so price must do the work.
Six Dollars in Ten Became Free Cash
Micron turned 61 cents of every sales dollar into free cash, the money left after paying for factories and equipment. A year ago it was 7 cents.
- Free cash flow: $33.2 billion, against $18.3 billion last quarter
- Factory and equipment spending: $10.8 billion, 20% of sales
- Buybacks: none this quarter, $650 million for the year
- Credit rating: raised to BBB+ at all three agencies
What to watch: the first payout plan after December 9, when limits tied to US chip subsidies ease. Management promises to return all excess cash. A small plan would say the factory bill comes first.
🐻 Bear Case
The Profit Margin Stops Climbing Next Quarter
Micron expects to keep a smaller share of each sales dollar next quarter, the first dip in this run. The cause is pay: bonuses rose for all staff, and the factory share of that cost lands next quarter.
- Operating costs: 4.7% of sales, up 1.1 percentage points
- Cloud Memory unit margin: level at 83% as lower-margin HBM chips grew
- Outside these figures: a $500 million patent licence charge
What to watch: gross margin two quarters out. Management calls next quarter the low point, yet plans higher bonuses and slower price rises. A second dip would mean costs are the problem.
The Contracts Guarantee Far Less Than Today
Management says its long-term contracts make results durable. The contracted amount is small next to what Micron earns today.
- Contracted future sales, counted at minimum prices: about $150 billion
- By our math: about two and a half quarters of sales at next quarter's pace
- Contract sales repriced at market rates: one quarter
Management says margins at the minimum prices would beat any earlier peak. Earlier peaks were in the low 60s, per the March call, against 87% now.
What to watch: whether Micron discloses the minimum prices. Without them, the contracts protect against a collapse, not against a large drop.
Factory Spending Is Set to Nearly Double
Micron is raising its factory spending, and most of the added space will not be ready until late 2028 or later. That is the old risk in memory: money is committed at peak prices and the supply arrives afterwards.
- Last fiscal year's spending: $27.4 billion
- First half of this fiscal year: about $25 billion, with the second half higher
- Full year, by our math: more than $50 billion
- New plants: Idaho and Taiwan in mid-2027; Japan, Singapore and a second Idaho plant in late 2028; New York in 2030
Management says customer contracts justify the build and that it cannot see when supply will catch up. It concedes the rest of the industry is adding space.
What to watch: equipment spending, which management says it will pace to demand. Buildings are the slow part; machines decide output. A jump in equipment spending before 2028 would mean supply is coming sooner.
High Prices Are Shrinking Phone and PC Sales
Memory is now expensive enough to hurt the markets that buy it. Micron now says phone and PC unit sales could each fall by double digits this year.
Its Mobile and Client unit shipped less memory than last quarter and grew only through price. Server makers are also fitting less memory per machine than Micron had expected. For now data centers take all Micron can make.
What to watch: the Mobile and Client unit's share of sales, 24% now against 32% two quarters ago. If data-center demand ever pauses, these weakened markets are where spare chips would have to go.
👓 Other Themes
Micron's Read on Supply Through 2028
Micron expects industry DRAM shipments to grow in the low 20s percent in each of the next two calendar years. It sees NAND in the mid-20s. It expects both to stay short of demand. Server unit sales are seen growing in the high teens this year and next, up from the low teens it expected for this year in March.
💲 Other KPIs
Customers are paying faster as sales grow. Receivables — bills sent but not yet paid — rose about half as fast as sales this quarter. By our math they equal about 65 days of sales, down from 68 last quarter. A year ago the figure was about 75.
Inventory jumped after a year of barely moving. It rose 21% from last quarter, and the company's count of days on hand went up nine to 129. Micron says it built ahead of retiring older chip lines and that bonus costs were added to inventory value. It expects the days to fall in coming quarters.
Net cash nearly tripled in one quarter, from $24.4 billion. Part of it is customers' money: $12.7 billion of refundable deposits sits on the balance sheet. Without the deposits, net cash is about $55.6 billion by our math. Micron returns deposits late in each contract if the customer buys as agreed. Debt is down to $5.2 billion.
The share count is creeping up, not down. It rose 1.4% from a year ago as staff equity awards outran a small buyback programme. With profit per share up elevenfold the dilution is minor. It is still the wrong direction for a company with this much cash.
🔮 Guidance
New. The plan calls for sales about 13% above this quarter, or about 22% per week by our math, because this quarter had an extra week. Micron landed above its range in every quarter of the past year, by a shrinking amount. If the pattern holds at the latest 8.5% gap, sales would reach about $67 billion. Management expects growth every quarter this fiscal year.
New. The plan has gross margin slipping 0.75 percentage points from 87.0%, the first planned decline in this run. Bonus costs stored in unsold chips are the cause. Management calls this the low point for the year, with slower price increases after it. Operating margin still rises to about 82.9% by our math, because operating costs fall.
New. Costs fall back from $2.57 billion as this quarter's $300 million community contribution and late bonus top-up drop out. The plan is still well above the $1.52 billion spent one quarter earlier.
New. The middle of the range is 14% above this quarter's $33.42. Profit per share grew 33% this quarter, helped by the extra week. The plan assumes about 1.15 billion shares and a tax rate near 15.5%.
Unchanged in direction, now with a figure. Operating costs would reach about $9.3 billion by our math, up 37%, mostly research and bonuses. That leaves about $2.4 billion a quarter for the rest of the year, above next quarter's level.
Raised. Management lifted its fiscal 2027 spending plan without giving a full-year figure. By our math the first-half number leaves about $13.5 billion for the second quarter. The second half is planned higher still, which by our math puts the year above $50 billion, against $27.4 billion last year. Most of the increase is buildings that open in late 2028 or later.
❓ Key Questions
What are the minimum prices in the contracts?
The $150 billion contracted total is counted at minimum prices. Management says margins at those prices beat any past peak but gives no figure. Without it, nobody can turn the contracts into a profit floor.
How much did HBM bring in this quarter?
Management says HBM grew faster than the company but gave no figure. HBM still earns a lower margin than ordinary memory, so its size decides how much it holds back the Cloud Memory unit.
How large is this year's factory spending in total?
The first half is about $25 billion and the second half is higher. No full-year figure or split between buildings and machines was given. Machines, not buildings, decide how fast new supply arrives.
What sits in $11.7 billion of other long-term liabilities?
This balance-sheet line was $2.0 billion a year ago. Its growth added $9.6 billion to operating cash flow in fiscal 2026. The release does not say what it is or whether it reverses.
Does the new outlook include any tariff costs?
Outlooks given a year ago and last December excluded new tariffs. This quarter's release and prepared remarks do not mention them either way.