Micron's transformation underway with record analyst price targets and multi-year HBM supply contracts locked in with hyperscalers.
Micron Technology is enjoying one of the strongest profit cycles in its history, with higher memory prices remaining a major driver of momentum. Robust demand for artificial intelligence servers, high-bandwidth memory, enterprise SSDs and advanced DRAM continues to outpace industry supply, creating a favorable pricing environment.
In the third quarter of fiscal 2026, Micron reported record revenues of $41.46 billion, up 74% sequentially and 346% year over year. Non-GAAP gross margin expanded to 84.9% from 74.9% in the previous quarter and 39% in the year-ago quarter, while non-GAAP earnings jumped to $25.11 per share from $12.20 in the previous quarter and $1.91 in the year-ago quarter. DRAM revenues increased 67% sequentially, supported by average selling prices rising in the low-60% range. NAND revenues climbed 99%, with average selling prices surging in the mid-80% range.
The pricing outlook remains encouraging. Micron expects DRAM and NAND demand to exceed industry supply beyond calendar year 2027 as AI adoption accelerates across data centers, PCs, smartphones and automotive applications. Limited wafer capacity, slower technology transitions and expanding HBM production are likely to keep memory supplies tight, supporting healthy pricing.
The company is strengthening pricing visibility through long-term strategic customer agreements covering a growing portion of its business. In the third quarter, Micron announced 16 strategic customer agreements across data center, consumer and auto markets, representing roughly 20% of DRAM volume and one-third of NAND volume over the covered period. For the fourth quarter of fiscal 2026, the company projects a non-GAAP gross margin of approximately 86%, indicating robust expansion from the year-ago quarter's 45.7%.
These contracts, combined with continued AI-driven demand and disciplined industry supply growth, should help the company sustain elevated margins. While memory remains cyclical, current industry dynamics suggest Micron's profit boom still has room to run.
Other major semiconductor players are also benefiting from the AI boom. NVIDIA continues to lead the AI accelerator market, with data center revenues growing 92% year over year in the first quarter of fiscal 2027. The company's non-GAAP gross margin reached 75% from 60.8% in the year-ago quarter, supported by strong pricing power for its AI GPUs and networking products. NVIDIA's growth indirectly benefits Micron because AI servers using NVIDIA chips require large amounts of DRAM and HBM memory. Advanced Micro Devices is also gaining momentum in AI and data center markets. Its EPYC server processors and Instinct AI accelerators are helping expand enterprise adoption. AMD's data center revenues surged 57% year over year to a record $5.78 billion in the first quarter of 2026, while non-GAAP gross margins expanded 180 basis points to 55.4%. As AI server deployments rise, AMD's growth is increasing demand for advanced memory and storage products supplied by Micron.
Shares of Micron have surged around 242.6% year to date compared with the broader Computer and Technology sector's return of 16.8%. From a valuation standpoint, Micron trades at a forward price-to-earnings ratio of 8.52, significantly lower than the sector's average of 23.18. The Zacks Consensus Estimate for Micron's fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 791% and 107%, respectively. Bottom-line estimates for both years have been revised upward in the past seven days.