TLDR
- Micron posted record Q2 FY2026 revenue of $23.9 billion, up 196% year-over-year
- Q3 guidance points to $33.5 billion in revenue and an 81% gross margin
- HBM supply is fully sold out through 2026, with allocations already set for 2027
- MU trades at roughly 7–8x forward earnings, well below semiconductor peers
- Wall Street holds a Strong Buy consensus with an average price target of $543.20
Micron is in the middle of its strongest business cycle on record, driven by demand for high-bandwidth memory (HBM) chips used in AI data centers. The numbers back it up.
Fiscal Q2 revenue came in at $23.9 billion — up 196% year-over-year and the largest sequential dollar increase in company history. That single quarter exceeded Micron’s entire fiscal 2022 revenue of $15.5 billion.
DRAM revenue hit $18.8 billion, up 207% year-over-year. NAND reached $5.0 billion, up 169%. Gross margin landed at 75%, non-GAAP EPS hit $12.20, and free cash flow reached a record $6.9 billion.
Micron also reduced debt in the first half of FY2026, pushing its net cash position to $6.5 billion — the highest in company history.
Guidance Points Even Higher
Q3 guidance is where things get interesting. Management is targeting $33.5 billion in revenue, a gross margin of around 81%, and non-GAAP EPS of $19.15.
That margin jump — from 75% in Q2 to a projected 81% in Q3 — suggests pricing power is still building, not leveling off.
HBM is central to this story. It requires nearly three times the wafer capacity of standard DRAM, which is pulling supply away from the broader memory market. DRAM prices reportedly surged 90–95% in Q1 calendar 2026 as a result.
Micron’s HBM supply is completely sold out for 2026. Allocations for 2027 are already set, and customer talks are extending into 2028.
The company recently disclosed its first-ever five-year strategic customer contract — a break from the typical one-year agreements that have historically defined the memory sector. That kind of long-term visibility changes the cyclical narrative somewhat.
Nvidia, Micron’s largest customer, has been a key driver of HBM demand. Micron’s fourth-generation HBM4 is in high-volume production, shipping one quarter ahead of schedule.
Still Trading at a Discount
Despite the record results, MU trades at roughly 7–8x forward earnings. Nvidia sits at around 24x forward earnings. Applied Materials is near 33x. The broader semiconductor sector averages around 27.5x trailing earnings.
For a company guiding to record-high margins and multi-billion quarterly free cash flow, that gap is hard to explain on fundamentals alone. Analysts suggest the market is still pricing Micron as a cyclical commodity name rather than a structural AI infrastructure play.
Bears point to the capital expenditure cycle — Micron has committed $25 billion in capex, while Samsung has pledged $73 billion. That level of coordinated spending has triggered oversupply before, and some expect pressure to return by 2027 or 2028.
Geopolitical risk is also present. China accounts for roughly 10% of revenue, and U.S. export controls have already restricted certain chip sales there. Domestic Chinese competitors in DRAM and NAND continue to develop.
Wall Street currently holds a Strong Buy consensus on MU — 25 Buy ratings, 3 Holds, zero Sells across 28 analysts. The average 12-month price target is $543.20, implying around 19% upside from the current price of $457.27.
The next key moment: the FY26 Q3 earnings call, where investors will be watching whether gross margin guidance holds above the 81% mark.
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