Micron Prints a Record 84.9% Margin and Guides to $50 Billion as Memory Sells Out

The Print

Micron's fiscal third quarter wasn't a beat so much as a regime change. Revenue came in at $41.46 billion against a Street near $35.7 billion — roughly four times the ~$9 billion the company did in the year-ago quarter. Non-GAAP EPS was $25.11 versus about $20.49 expected, and gross margin printed a company-record 84.9%, up from 27% a year earlier. HBM4, the next-gen high-bandwidth memory that feeds AI accelerators, already cleared $1 billion in quarterly revenue in its first full quarter.

Then the guide did the heavy lifting. Management put fiscal Q4 revenue at $50 billion, plus or minus $1 billion, with gross margin near 86% and EPS around $31 — against consensus closer to $43 billion. A memory company guiding sequential revenue up roughly 20% into a record margin is not how this notoriously cyclical industry usually behaves at the top of a cycle.

Why $100 Billion Booked Matters More Than the Beat

The line that should reset how traders price MU isn't the headline number — it's the contract structure underneath it. Micron disclosed 16 strategic customer agreements, of which 14 carry roughly $100 billion in minimum contracted revenue over their remaining terms, most running through calendar 2030. These are take-or-pay deals — binding volume commitments at agreed prices — covering about 20% of DRAM volume and a third of NAND over the period. On top of that, Micron collected $22 billion in customer prepayments, with hyperscalers effectively wiring cash to secure allocation.

That's the difference between a cyclical spike and a structural repricing. Calendar-2026 HBM supply, including HBM4, is sold out, and Micron says it can meet only half to two-thirds of some customers' demand. The company sees the HBM market growing from about $35 billion toward $100 billion by 2028. When supply is pre-sold under take-or-pay terms, the classic memory bear case — that pricing collapses the moment demand blinks — loses most of its teeth for the next two years.

The Perp, the Basis, and the Tape

Micron closed the regular session basically flat near $1,047, then ran about 14.5% after hours toward $1,200 once the release hit. The HIP-3 perp is up 19.09% over the last eight hours to roughly $1,209 on $632 million of 24h volume — and it's printing slightly above the after-hours cash quote. Part of what looks like extra outperformance is extended-hours basis: the perp prices a forward view while the regular session is closed, so it tends to run hot relative to last-printed spot until the cash market reopens.

The read-through hit the whole memory and storage complex. SanDisk, Western Digital, and Qualcomm all jumped roughly 10-13% after hours on the same tape, and the sell side moved with it — Bank of America raised its MU price target around the print. The honest caveat is that MU had already run hard into earnings, so the cleanest near-term risk is a basis-compression fade when the regular session reopens and the perp re-converges with cash — a blowout this size still has to clear an extended valuation.