A Record Year and Strong Outlook: Micron's Report Confirms the Sustainability of the AI Boom

Micron, the largest U.S. manufacturer of memory chips for AI, reported record results for fiscal year 2026 and issued a forecast that exceeded analysts' expectations. Its performance is seen on Wall Street as an indicator of demand for AI.

In the fourth fiscal quarter, which ended on August 27, Micron's revenue increased nearly fivefold compared with the same period last year. It reached $54.2 billion, while analysts surveyed by LSEG had expected only $51.1 billion, according to CNBC. Adjusted earnings per share rose by more than 1,000%, to $33.42—versus a consensus estimate of $31.61.

For the entire 2026 fiscal year, the chipmaker's revenue totaled $133.19 billion, a 3.6-fold increase. Adjusted profit increased more than ninefold.

The chipmaker expects revenue of about $61.5 billion in the current quarter, which marks the start of the new fiscal year. Wall Street had forecast an average of $56.8 billion, according to CNBC. The earnings forecast also significantly exceeded market estimates.

“Micron posted record results in fiscal year 2026, and we expect fiscal year 2027 to be even stronger,” said Micron CEO Sanjay Mehrotra in a press release. “Memory expands the capabilities of artificial intelligence and enhances the competitiveness of our customers’ platforms.”

At the same time, the manufacturer warned that it had decided to increase pay for all employees, which would put pressure on profitability. This quarter, profitability will decline from 87% to 86.3%—a sharper drop than analysts had forecast.

Immediately after the earnings report was released, Micron’s stock rose 1% in after-hours trading, but then gave up some of its gains and even briefly dipped into negative territory. Since the beginning of the year, the company’s market value has surged 273%. At the close of the main trading session on September 30, Micron shares were the top performers this year among the components of the Philadelphia Stock Exchange Semiconductor Index, which is closely watched by investors, Bloomberg notes.

Micron is benefiting from a global shortage caused by unprecedented demand for memory chips needed to power models and other AI workloads, according to CNBC. The supply shortage has led to a sharp rise in memory prices and, as a result, higher prices for consumer electronics, including Apple’s iPad and MacBook. In the quarter under review, Micron's revenue from DRAM memory surged 343% and accounted for 73% of the company's total revenue.

Micron is the only U.S. manufacturer of high-speed HBM memory, which consists of stacked layers of general-purpose dynamic random-access memory (DRAM). Cutting-edge graphics and central processing units from manufacturers such as Nvidia and AMD require ever-increasing amounts of HBM to handle AI workloads, and the world’s leading chipmakers are not yet able to produce it in sufficient quantities. That is precisely why Micron is investing $250 billion in the construction of two new manufacturing facilities.

The HBM market leaders—South Korea’s SK Hynix and Samsung—are also undertaking large-scale expansions of their HBM manufacturing facilities. Of the three companies, Micron holds the smallest share of the HBM market.

The memory chip industry is known for its cycles of sharp ups and downs, although companies are trying to smooth out these fluctuations by entering into more long-term contracts, Bloomberg notes.

"Investors will likely want to understand how prices affect gross margins and how sustainable the current level of profits is," Melissa Otto, head of Visible Alpha Research at S&P Global, told Bloomberg.

“In our view, the outlook remains very favorable in the near term: we’re seeing strong demand and rising prices,” the agency quotes Morgan Stanley analyst Joseph Moore as saying. — The discussion has quite clearly shifted from the question ‘How good can things get?’ to the question ‘How long can things stay this good?’

“At this point, I haven’t heard of a single negative signal that would indicate the memory market cycle might reverse and enter a downturn in the foreseeable future,” — said Handy Susanto, portfolio manager at Gabelli Funds, to CNBC following the release of Micron’s earnings report.

This article was AI-translated and verified by a human editor