Memory chip maker Micron (NYSE:MU) reported fourth-quarter 2025 results that beat market revenue expectations, with sales up 56.7% year-over-year to $13.64 billion. Additionally, revenue guidance for the next quarter ($18.7 billion at the midpoint) was surprisingly good and 29.3% higher than analysts expected. Its non-GAAP earnings of $4.78 per share were 20.7% higher than analysts’ consensus estimates.
Is now the time to buy MU? Find out in our full research report (it’s free for active Edge members).
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Income: 13.64 billion dollars compared to 13 billion estimated by analysts (growth of 56.7% over one year, excess of 5%)
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Adjusted EPS: $4.78 versus $3.96 estimated by analysts (20.7% overshoot)
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Adjusted operating profit: $6.42 billion versus $5.34 billion estimated by analysts (47% margin, 20.3% overrun)
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Revenue forecast for the first quarter of 2026 is $18.7 billion at the midpoint, above analyst estimates of $14.46 billion
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Adjusted EPS Forecast for Q1 FY 2026 is $8.42 at the midpoint, above analyst estimates of $4.49.
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Operating margin: 45%, compared to 25% in the same quarter last year
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Outstanding inventory days: 125, compared to 121 in the previous quarter
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Market capitalization: $253.1 billion
Micron’s fourth-quarter performance sparked a significant positive market reaction, with its results beating Wall Street’s expectations for non-GAAP revenue and earnings. Management attributed the quarter’s outperformance primarily to growing demand for advanced memory products in data centers, AI and automotive applications. CEO Sanjay Mehrotra highlighted record results across all business units and noted that DRAM and NAND sales benefited from tight supply and higher prices. He explained: “We achieved a number of records during the fiscal first quarter,” noting that strong execution in a constrained supply environment and increasing adoption of AI were central to the quarter’s results.
Looking ahead, management’s focus revolves around continued tightening of supply and demand and accelerating AI-driven investments in high-performance computing. Mehrotra said Micron already has deals in place for all of its HBM (high-bandwidth memory) production for 2026 and expects the total addressable market for HBMs to reach $100 billion by 2028, two years earlier than expected. Chief Financial Officer Mark Murphy added that the company’s ability to sustain margin expansion will depend on continued improvement in efficiency and cost execution as it develops new technology nodes. Management recognized that supply constraints may limit the ability to fully meet customer demand, especially as AI memory content in servers and edge devices continues to increase.
Management attributed the quarterly momentum to strong AI-related demand, tight industry supply and operational advancements in advanced memory technologies, which drove increased margins and record results across all business units.
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AI Accelerates Data Center Growth: The rapid development of AI data centers has driven the demand for high-performance memory, with HBM and data center DRAM at the center of this trend. Mehrotra noted that memory is “now essential to the cognitive functions of AI,” shifting its role from a system component to that of a strategic enabler for real-time processing.
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HBM and multi-year contracts: Micron has finalized price and volume agreements for its entire HBM 2026 supply, including HBM4, and is negotiating multi-year contracts with firmer commitments than in previous rounds. This approach reflects customer concerns about long-term access and further strengthens Micron’s competitive position in the AI memory space.
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Technology node transitions: The rise of advanced DRAM (1-gamma) and NAND (G9) nodes is on track and will be key drivers of bit growth in 2026. Management emphasized that these transitions enable higher yields, lower costs and product differentiation, particularly in the AI and automotive markets.
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Tight supply environment: Industry-wide constraints, particularly for HBM, are expected to persist through 2026 and beyond. Micron is only able to meet about half to two-thirds of key customer demand in the medium term and is accelerating investments in new cleanrooms and manufacturing sites in the United States and Asia.
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Cost discipline and margin expansion: Strong cost execution, improved product mix and operational leverage led to strong improvement in gross and operating margins. Murphy said that while some start-up costs are expected as new plants ramp up, improvements in efficiency and scale should offset these pressures as new nodes account for the majority of production.
Micron’s near-term outlook is shaped by sustained investments in AI infrastructure, continued supply constraints, and the company’s continued transition to advanced memory nodes.
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AI-enabled product demand and mix: Management expects increased AI-driven demand for high-performance HBM and DRAM to drive strong revenue and margin growth, but supply limitations could limit shipping volumes. Mehrotra explained that Micron’s “technology leadership is fundamental” as AI platforms increasingly require larger memory contents.
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Capacity expansion and supply risk: The company is investing in new cleanroom space and accelerating the timeline for manufacturing expansions in Idaho, New York, Japan, Singapore and India. Murphy warned that despite these efforts, industry supply would remain tight and Micron would not be able to fully meet customer demand in the near term, particularly for HBM products.
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Execution of the technological transition: The pace and success of the scale-up of 1-gamma DRAM and G9 NAND nodes will be crucial to cost competitiveness and profitability. Management emphasized that faster yield improvement and continued cost discipline are necessary to support margin expansion as new products make up a larger share of production.
Over the coming quarters, the StockStory team will monitor (1) how quickly Micron can field advanced DRAM and NAND nodes to maintain cost and margin advantages, (2) progress on manufacturing expansions in Idaho, New York and Asia to ease supply constraints, and (3) the pace of multi-year contract signings and their impact on visibility and pricing. Executing AI-enabled new product launches and meeting strong customer demand despite industry strains will also be critical markers of success.
Micron is currently trading at $243.72, up from $226.00 just before earnings. At this price, is it a buy or a sell? Find out in our full research report (it’s free for active Edge members).
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