Micron Earnings Lift Outlook on AI Memory Demand
Micron earnings beat estimates and raised FY2026 capex to $20 billion, tightening HBM supply and supporting shares and pricing and boosting flows.
KEY TAKEAWAYS
- Quarter beat: revenue $13.6B, non-GAAP EPS $4.78, gross margin 56.8%.
- Q2 guidance: revenue growth 132.0% YoY, gross margin 68.0%, EPS $8.42.
- Management raised FY2026 capex to $20.0B and said 2026 HBM capacity was fully booked.
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Micron Technology on Dec. 17, 2025 reported stronger-than-expected Q1 results, saying its 2026 high-bandwidth memory (HBM) output is fully booked amid AI-driven demand. The company raised its FY2026 capital spending to $20 billion to expand DRAM and HBM production.
Quarter Results and Guidance
For the quarter ended November 2025, Micron reported revenue of $13.6 billion, non-GAAP earnings per share (EPS) of $4.78, and a non-GAAP gross margin of 56.8%, up from 39.5% a year earlier. Operating income reached $6.4 billion with a 47.0% operating margin. These results exceeded consensus estimates by roughly 7.3% on revenue and 22.3% on EPS.
Micron projected Q2 FY2026 revenue growth of 132.0% year-over-year, a gross margin of 68.0%, and EPS of $8.42. The company posted record FY2025 revenue of $37.4 billion. Analysts expect FY2026 revenue near $70 billion, supported by DRAM demand growth in the low 20% range, which underpins management’s aggressive outlook.
Capacity, Capital Spending, and Market Position
Micron has secured full-year HBM supply agreements despite bookings outpacing available capacity, driven by strong AI-related DRAM demand and ongoing supply shortages. This dynamic has boosted margins and prompted management to accelerate capital expenditures.
The company held about 21.0% of the HBM market as of early 2026 and leads in efficiency for HBM3E and HBM4, delivering roughly 30.0% lower power consumption than competitors. The HBM market is projected to grow from $35 billion in 2025 to $100 billion by 2028. Policy support from the CHIPS and Science Act has provided about $6.2 billion in grants and tax credits to strengthen domestic semiconductor manufacturing. Restrictions on advanced manufacturing in China further encourage onshore capacity expansion.
Despite these advantages, competition and geopolitical tensions remain challenges. SK Hynix controls more than half of the HBM market, and Samsung remains a significant rival.
Policy Support and Factory Timeline
The CHIPS Act has allocated $6.2 billion in direct grants and tax credits for domestic fabrication plants, including Micron’s planned megafab in Clay, New York. Major construction on the Clay facility is scheduled to begin in Q2 2026, with first wafer production expected in 2030. Analysts note execution risks around this timeline, which could affect how quickly new capacity eases current supply tightness.
