Micron forecasts quarterly revenue above estimates driven by strong demand for memory chips
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Micron Technology forecast Q4 results well above Wall Street estimates, sending shares up 12% in after-hours trading after reporting Q3 revenue of $41.46B versus $35.85B expected and adjusted EPS of $25.11 versus $20.78 expected.
- Micron disclosed customers have committed $22B across 16 strategic agreements with take-or-pay terms, cash deposits, and pricing floors — with remaining performance obligations on agreements entered so far totaling approximately $100B.
- Micron's chief business officer Sumit Sadana told Reuters the deals were five-year term take-or-pay agreements that the memory industry has never done before, underscoring how intense HBM demand has become.
- CEO Sanjay Mehrotra said tight conditions will persist beyond calendar 2027, citing AI-driven demand across all segments and structural supply constraints, while Q4 capex guidance of ~$10B topped analyst estimates of $8.89B.
- As the only U.S. manufacturer of high-bandwidth memory chips used alongside Nvidia's AI processors, Micron's stock has more than tripled this year, lifting its market cap past $1 trillion despite a 13% drop the prior session.
- Qualcomm signalled at its investor day that its new AI chips will use cheaper memory — a move analysts flagged as a potential limit on how much premium pricing HBM can sustain over time.
- The post-earnings rally also lifted Western Digital, Sandisk, Seagate, Arm Holdings, Marvell, Broadcom, Applied Materials, ASML and other chipmakers, generating over $400B in market value in a single session.
Why it matters: Micron's $22B in five-year take-or-pay commitments transfer volume risk from chipmaker to buyer and lock in premium HBM pricing through roughly 2030, but Mehrotra's own admission that supply cannot catch demand before 2027 means Micron's $1T+ valuation is fully tethered to continued AI demand outrunning the $10B in new annual capacity. Capital Markets head Jake Behan's warning that 'the bull case is built on tightness' and Qualcomm's cheaper-memory pivot are the only structural counterweights visible in the numbers.
Ask SkimNews
