MU Q4 2026 Earnings Analysis
Micron delivered record Q4 FY2026 revenue of $54.2B with 87% gross margin, strong free cash flow of $33.2B, and expects FY2027 to be another record year with sequential quarterly revenue growth.
Key Metrics
Key Takeaways
- Q4 revenue of $54.2B (+379% YoY) with record 87% gross margin and $33.2B free cash flow.
- DRAM revenue exceeded $100B in fiscal 2026; data center revenue up fourfold year-over-year.
- 26 strategic customer agreements signed covering 35% of revenue through 2030 with $32B deposits.
Listen On
Available In
Transcript
// Full episode scriptWelcome to Beta Finch, your AI-powered earnings breakdown, where we take the numbers and the noise from the latest earnings calls and turn them into something you can actually use. I'm Alex, joined as always by Jordan.
Hey everyone. And we've got a big one today.
Before we get into it — this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.
With that out of the way, let's talk Micron. Fiscal Q4 2026, and Alex, I don't think "exceptional" even covers it.
It really doesn't. Let's start with the full-year picture because it sets the stage. Fiscal 2026 revenue came in at $133.2 billion, up 256% year-over-year. Data center revenue alone was up fourfold. And get this — Micron's DRAM revenue by itself topped $100 billion for the year.
$100 billion from one product category. That's a company-sized number for most chipmakers.
Right. And the margins tell the same story. Gross margin expanded to 81.1% for the year, a 40-point jump from fiscal 2025. EPS was up 811% to $75.52.
Eight hundred and eleven percent. Let's zoom into the quarter itself, because Q4 alone was a record-breaker. $54.2 billion in revenue, up 31% sequentially, up 379% year-over-year. That's their sixth straight quarterly revenue record.
DRAM revenue hit $39.8 billion, 73% of total revenue, with prices up in the high teens percentage range. NAND revenue was $14.1 billion, up 526% year-over-year, with prices up around 30%. Consolidated gross margin for the quarter: 87%.
And every single business unit posted a record. Cloud Memory at $16.3 billion, Core Data Center at $18 billion with 90% gross margins — 90%, Alex — Mobile and Client at $13.1 billion, and Automotive and Embedded at $6.8 billion. There's genuinely no weak link here.
So the obvious question is: what happens next? And CEO Sanjay Mehrotra didn't hedge at all. He said fiscal 2026 was outstanding, but fiscal 2027 is expected to be even better.
That's a bold thing to say after a year like that. But the reasoning is interesting — it's not just "AI demand is strong," it's that supply is structurally behind. Micron says they don't have line of sight to when memory supply and demand even return to balance. For calendar 2027 and 2028, both DRAM and NAND are expected to stay supply-constrained.
And they're backing that up with something new to this cycle — strategic customer agreements, or SCAs. These are multi-year take-or-pay contracts. Micron now has 26 of them signed, representing over 35% of revenue through 2030, with customer cash deposits now at $32 billion.
That's the part I find most interesting, honestly. More than 75% of Micron's 2027 output is already committed — between SCA and non-SCA customers. That's a company that's basically pre-sold most of next year before it even starts.
It also explains the CapEx story. Mark Murphy, the CFO, said they're increasing fiscal 2027 CapEx versus prior plans — first-half CapEx alone around $25 billion, with more in the back half. But the key detail is the mix: a lot of this is construction spending, not equipment, aimed at getting clean room space ready for late 2028 and beyond.
Which tells you this isn't a short-term chase of today's prices — they're building for a multi-year runway. On HBM specifically, Sanjay noted they've completed agreements for the vast majority of 2027 HBM bit supply, with significant price increases that are narrowing the margin gap versus conventional DRAM.
Let's talk guidance, because it's just as striking. Fiscal Q1 revenue guide is $61.5 billion, plus or minus $1.5 billion — another record. EPS guided to $38.15. But there's a nuance worth flagging: gross margin guidance actually steps down a bit to around 86.25%.
Right, and Mark explained why in the Q&A — it's not a demand issue at all. It's because they boosted incentive compensation for employees given how strong the year was, and those higher costs got absorbed into inventory in Q4, so they flow through cost of goods sold in Q1. He called fiscal Q1 "the floor" for margins in fiscal 2027, with margins expected to improve from there.
The Q&A had some great moments too. UBS's Tim Arcuri pushed hard on capital returns, given Micron's sitting on $73.5 billion in cash and investments with only $5.2 billion in debt.
And Mark basically confirmed what everyone was hoping to hear — free cash flow is going to be significantly higher than the $33 billion reported in Q4, they expect to hit their target cash level by the end of fiscal Q1, and they intend to ramp up buybacks starting December 9th, tied to the anniversary of their CHIPS Act agreement.
There was also a sharp exchange about whether a major customer might "de-spec" HBM to save costs, which could theoretically free up capacity for conventional DRAM. Sanjay's answer was pretty direct — he said those kinds of optimizations have diminishing returns and don't change the underlying latent demand for memory, since bigger AI models and longer context windows keep needing more of it regardless.
And he dropped a stat that stuck with me — physical AI. Level 4+ autonomous vehicles need over 200 gigabytes of memory and multiple terabytes of storage, more than 10 times what today's semi-autonomous vehicles use. Humanoid robots are expected to need similar amounts. Sanjay framed that as a demand driver that really kicks in by the end of the decade.
So where does this leave investors? The headline here is that Micron isn't just riding an AI cycle — they're trying to convince the market this is a structural reset in how memory gets priced and supplied, with SCAs locking in visibility years out, record margins across every segment, and a balance sheet strong enough to fund both heavy CapEx and bigger buybacks at the same time.
The flip side worth watching is exactly what came up in Q&A — margins dip in fiscal Q1 before improving, CapEx is stepping up meaningfully, and the stock's valuation already suggests some investors are nervous this could be as good as it gets for pricing. Micron's management clearly disagrees, pointing to 2027 and 2028 as tighter, not looser.
That tension between a historically strong print and a cautious market is really the story to watch this quarter.
Before we wrap — everything discussed is AI-generated analysis for educational purposes. Past performance doesn't guarantee future results. Please do your own due diligence.
Micron heads into fiscal 2027 with records across the board, a supply-constrained industry backdrop, and a lot of commitments — from customers and from management — that'll be worth checking back in on next quarter.
We'll be watching those margin trends and the buyback ramp closely. Thanks for listening to Beta Finch.
Catch you next time.