Amidst the explosion in demand for AI-driven memory chips, US memory chip giant Micron Technology (MU) recently delivered an exceptionally strong financial report. However, accompanying the earnings release was an ambitious and costly expansion plan, which led to cautious investor sentiment and a drop in the company’s share price during after-hours trading.
According to the financial data, for the second fiscal quarter ending February 26, 2026, Micron Technology achieved revenue of $23.86 billion, a nearly threefold surge compared to $8.05 billion in the same period last year, far exceeding the market expectation of $20.07 billion. Net profit skyrocketed from $1.58 billion in the same period last year to $13.8 billion, demonstrating significantly enhanced profitability. Adjusted earnings per share reached $12.20, also substantially surpassing the market forecast of $9.31. Gross margin doubled, leaping from 36.8% to 74.4%.
This robust performance is primarily attributed to the explosive growth of generative artificial intelligence. The development of AI has not only boosted demand for AI chips from companies like NVIDIA (NVDA) but has also intensified the supply-demand imbalance for DRAM and NAND flash memory, as each generation of AI chips requires increasingly higher memory capacity. Micron Technology CEO Sanjay Mehrotra attributed this outcome to the combined effects of AI-driven demand, supply constraints, and the company’s efficient execution.
From a business segment perspective, AI’s driving force is clearly visible. Revenue related to cloud computing storage grew over 160% year-over-year, reaching $7.75 billion. Meanwhile, the mobile and PC businesses also benefited from the demand recovery and the spillover effects of the AI cycle, with revenue jumping from $2.24 billion to $7.71 billion.
Looking ahead, the company provided even more optimistic guidance. It forecasts revenue for the third fiscal quarter to reach approximately $33.5 billion, with adjusted earnings per share around $19.15, significantly higher than market expectations. Company executives emphasized that as AI develops, computing architectures will increasingly rely on memory resources, positioning Micron as a core beneficiary of this long-term trend.
However, the market still harbors doubts about Micron’s long-term growth. As a core player in AI computing power, NVIDIA’s future choice of HBM (High Bandwidth Memory) suppliers will have a decisive impact on Micron. A reduction in its reliance on Micron’s products would undoubtedly pose a challenge.
At the industry level, the tight supply of memory chips has transmitted throughout the entire technology supply chain. As manufacturers prioritize high-margin HBM products, supply for traditional memory products has tightened, leading to continuous price increases. HP (HPQ) previously stated that memory chip prices have nearly doubled. The Chairman of SK Group also predicted that the global semiconductor supply-demand imbalance could persist for several more years.
Micron Technology has become one of the best-performing AI companies over the past year, with its stock price increase at one point surpassing that of well-known companies like NVIDIA. Market analysts believe that the astonishing rise in memory prices will continue into 2026. UBS expects DRAM prices to surge by 62% in the first quarter, with NAND flash prices also rising by 40%. This is a significant positive for Micron’s DRAM business, which contributes nearly 80% of its revenue. Micron pointed out that the revenue for the HBM market is expected to nearly triple between 2025 and 2028, reaching $100 billion, implying that the company’s biggest growth catalyst will persist for several years.
Currently, Micron Technology’s price-to-earnings (P/E) ratio is approximately 38 times, slightly higher than the Nasdaq 100 index’s 32 times. However, considering analysts project its earnings per share could grow by a substantial 322% to $35 this year, with continued significant growth expected next year, such a valuation seems plausible. Some believe that if the company can achieve the market’s anticipated profitability levels, the stock price still has considerable room to rise. This suggests that the upward momentum for this AI star stock may not yet be over.
