Micron Technology Q1 Earnings Call Highlights

Micron Technology (NASDAQ:MU) reported fiscal first-quarter 2026 results that exceeded the high end of management’s guidance on revenue, gross margin, and earnings per share, supported by what executives described as strong execution across end markets amid a tight supply environment. Chairman, President and CEO Sanjay Mehrotra said the company set multiple quarterly records, including total company revenue, DRAM and NAND revenue, HBM and data center revenue, and record revenue for each business unit.

CFO Mark Murphy said Micron generated record free cash flow, reduced debt, and returned to a net cash position during the quarter. Management also provided a fiscal second-quarter outlook calling for another record quarter and further margin expansion, while noting that any potential impacts from new tariffs were not included in guidance.

Record quarter driven by tight supply and higher pricing

Murphy said total fiscal Q1 revenue was $13.6 billion, up 21% sequentially and 57% year over year, marking a quarterly record for the third consecutive quarter. Consolidated gross margin was 56.8%, up 11 percentage points sequentially, which Murphy attributed to higher pricing along with strong cost execution and favorable mix.

• DRAM revenue: $10.8 billion (79% of total revenue), up 69% year over year and up 20% sequentially. Murphy said DRAM bit shipments were up slightly, while prices rose about 20% due to tight industry supply, pricing execution, and favorable mix.
• NAND revenue: $2.7 billion (20% of total revenue), up 22% year over year and up 22% sequentially. Murphy said NAND bit shipments increased in the mid- to high-single-digit percentage range and pricing rose in the mid-teens percentage range, also driven by tight supply and favorable mix.

By business unit, Micron posted record revenue across the board. Cloud Memory Business Unit revenue was $5.3 billion (39% of total) with gross margin of 66%. Core Data Center Business Unit revenue was $2.4 billion (17%) with gross margin of 51%. Mobile and Client Business Unit revenue was $4.3 billion (31%) with gross margin of 54%. Automotive and Embedded Business Unit revenue was $1.7 billion (13%) with gross margin of 45%.

Operating expenses were $1.3 billion, up $120 million sequentially, driven by higher R&D in support of new DRAM and NAND nodes. Operating income was $6.4 billion, representing a 47% operating margin. Non-GAAP diluted EPS was $4.78. Free cash flow was $3.9 billion on operating cash flow of $8.4 billion and capital expenditures of $4.5 billion.

HBM demand outlook accelerates; 2026 supply fully contracted

Mehrotra emphasized accelerating AI-driven demand for high-bandwidth memory and said Micron has completed agreements on price and volume for its entire calendar 2026 HBM supply, including its HBM4. He raised Micron’s HBM total addressable market outlook, forecasting an HBM TAM CAGR of about 40% through calendar 2028, from roughly $35 billion in 2025 to around $100 billion in 2028—an inflection he said arrives two years earlier than the company’s prior outlook.

Mehrotra also said Micron’s HBM4, targeting “industry-leading speed over 11 gigabits per second,” remains on track to ramp with high yields in the second calendar quarter of 2026. In the Q&A, management said it expects HBM4 to have a faster yield ramp than HBM3E and that the mix of HBM3E and HBM4 in 2026 will depend on customer requirements. Executives did not provide a breakout of HBM revenue in the quarter or in the guidance.

Supply constraints persist; CapEx raised to support HBM and 1-gamma

Management repeatedly highlighted that demand is outpacing supply across both DRAM and NAND and expects tight conditions to persist “through and beyond calendar 2026.” Mehrotra said the rapid increase in HBM demand further pressures the environment because of a “3:1 trade ratio with DDR5,” which he said increases with future HBM generations. He also pointed to lengthening lead times for cleanroom build-outs.

Micron increased its fiscal 2026 capital expenditure plan to approximately $20 billion from a prior estimate of $18 billion, primarily to support HBM supply capability and 1-gamma DRAM supply. Murphy told analysts the company plans to roughly double “brick-and-mortar construction” CapEx from 2025 to 2026 and expects 2027 CapEx to be higher, while stressing that Micron will remain disciplined and keep supply growth in line with demand.

Mehrotra provided updates on manufacturing initiatives, including pulling in the timeline for first wafer output from its first Idaho fab to mid-calendar 2027, breaking ground on its first New York fab in early calendar 2026 with expected supply “in 2030 and beyond,” adding cleanroom space in Hiroshima, and advancing an HBM advanced packaging facility in Singapore to contribute meaningfully in calendar 2027. He also said Micron’s assembly and test facility in India has initiated pilot production and will ramp in 2026.

End-market commentary: data center, PC, mobile, and auto

Mehrotra said AI data center build-out plans have driven a sharp increase in memory and storage demand forecasts. He raised Micron’s calendar 2025 server unit growth expectation to the “high teens” percentage range from a prior outlook of 10% and said strength is expected to continue in 2026.

In data center NAND, Mehrotra said revenue exceeded $1 billion in fiscal Q1 and highlighted product developments including what he called the world’s first PCIe Gen 6 SSD leveraging Micron’s G9 NAND. He also said QLC-based 122TB and 245TB G9 SSDs are entering qualification at multiple hyperscale customers.

In PCs, Mehrotra forecast calendar 2025 unit sales growth in the high single-digit percentage range, above the prior mid-single-digit expectation, driven by Windows 10 end-of-life and AI PCs, while cautioning that supply constraints may affect some 2026 PC shipments. In mobile, he said calendar 2025 smartphone unit volumes are on track to grow in the low single-digit percentage range, with AI driving memory content gains; he noted that the shipment mix of flagship smartphones with 12GB of DRAM rose to 59% in calendar Q3, more than double the year-ago level.

In automotive and industrial markets, Mehrotra cited robust demand tied to advanced driver assistance adoption and autonomous systems, and said Micron’s ASIL-rated LPDDR5X and UFS 4.1 products have secured “billions of dollars in design wins.” He also noted strong demand for LPDDR4X and DDR4 and referenced investments to provide long-term supply from the company’s Manassas, Virginia fab.

Q2 guidance calls for new records and further margin expansion

For fiscal second quarter 2026, Murphy guided to record revenue of $18.7 billion plus or minus $400 million, gross margin of 68% plus or minus 100 basis points, operating expenses of about $1.38 billion plus or minus $20 million, and record non-GAAP EPS of $8.42 plus or minus $0.20 (based on about 1.15 billion shares). Murphy said higher price, lower cost, and favorable mix are expected to contribute to gross margin expansion, while noting that margin expansion beyond Q2 would likely be more gradual at elevated levels.

In the Q&A, Mehrotra said Micron is in discussions with several key customers on multi-year contracts that include DRAM and NAND, describing them as structurally stronger than prior long-term agreements and including specific commitments, though he did not provide timing or additional details.

About Micron Technology (NASDAQ:MU)

Micron Technology, Inc is a global semiconductor company that designs and manufactures memory and storage solutions. Its product portfolio includes dynamic random-access memory (DRAM), NAND flash memory, solid-state drives (SSDs), memory modules and embedded memory solutions for a wide range of computing and electronic devices. Micron supplies components used in data centers, enterprise and cloud infrastructure, client computing, mobile devices, automotive systems and industrial applications, and also markets consumer-facing products under the Crucial brand.

Founded in 1978 and headquartered in Boise, Idaho, Micron has grown into an international manufacturer with research, development and production facilities across multiple regions.