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Micron Technology Q1 2026 Earnings

Micron Technology (NASDAQ: MU) has officially kicked off its fiscal 2026 with a performance that can only be described as awesomesauce. As the leading American manufacturer of memory and storage solutions, Micron is starting to look less like just a cyclical chipmaker, it starting to solidify its position as a backbone of the global Artificial Intelligence (AI) revolution(if you believe in that sort of thing).

In its fiscal first quarter (FQ1) 2026, Micron blew through expectations and gave a great outlook, providing a glimpse into a future where memory is the critical bottleneck for the next generation of computing.

What Does Micron Technology Do?

Micron specializes in two primary types of semiconductor products: DRAM (Dynamic Random Access Memory) and NAND Flash storage.

DRAM: The working memory used in servers, PCs, and smartphones to run applications.
NAND: The permanent storage used in SSDs and mobile devices.

As AI models like ChatGPT and enterprise-level LLMs (Large Language Models) grow in complexity, they require exponentially more memory to process data. This has catapulted Micron from a commodity supplier to a strategic partner for AI giants like NVIDIA. There’s a reason Micron has recently announced they’re exiting the consumer market and it’s because chips like Nvidia’s newest GB300 have 37 TB of memory and Micron can’t produce that fast enough.

FQ1 2026 Earnings: Better on Both Top and Bottom Lines

Micron’s FQ1 2026 results were the type of earnings investors love to see.

The Numbers at a Glance:

Revenue: $13.64 billion (compared to $11.32 billion in the previous quarter and $8.71 billion a year ago). This significantly beat analyst estimates of approximately $12.8 billion.
Non-GAAP EPS (Earnings Per Share): $4.78 per diluted share, comfortably ahead of the consensus estimate of $3.96.
Gross Margin: 56.8% (Non-GAAP), showing massive expansion from 39.5% just last year. Operating income margin was up almost 20% as well.

The revenue growth—up 57% year-over-year—was fueled by record-breaking sales in the Data Center Business Unit, which saw triple-digit percentage growth compared to the same period last year.

A Bullish Outlook: Setting Records in Q2

Management didn’t stop at the current quarter’s success. The guidance for FQ2 2026 was arguably the highlight of the report. Micron expects:

Revenue: $18.70 billion (± $400 million), which would be a new all-time record and a big jump over the $14.2 billion the market expected.
Non-GAAP EPS: $8.42 (± $0.20) against expectations of $4.49.
Gross Margin: Approximately 68.0% which is another significant jump over the already impressive number this quarter.

This outlook indicates that the AI tailwind is accelerating rather than slowing down despite the recent correction we’re seeing. The company is seeing a massive shift toward HBM (High Bandwidth Memory), specifically HBM3E, which is used in high-end AI GPUs. Micron noted that their HBM capacity for the 2026 calendar year is already essentially sold out.

What’s Going Well (The Catalysts)

HBM Leadership: Micron’s HBM3E consumes 30% less power than competitors’ products, a massive advantage for data centers trying to manage electricity costs.
Product Mix: The company is successfully shifting its production away from lower-margin commodity chips toward high-value products like high-capacity Server DIMMs and LPDDR5X for AI PCs and AI Smartphones. Being Nvidia’s partner is also a nice boost to their revenue as those chips are selling out as fast as they’re made and that benefits Micron.
Pricing Power: Because industry supply remains tight, Micron has significant leverage to increase prices, which is reflected in the skyrocketing gross margins and an improving bottom line.

The Struggles (The Risks)

Despite the record numbers, it isn’t all smooth sailing:

CapEx Intensiveness: To keep up with demand, Micron is projecting $20 billion in capital expenditures for fiscal 2026. This is a massive cash outlay that can weigh on the balance sheet if the market turns but so far the demand seems to be there.
Supply Constraints: Micron is effectively supply-constrained in several key areas. While this keeps prices high, it means they are leaving money on the table because they simply cannot build chips fast enough.
Non-AI Markets: While Data Centers are booming, the recovery in traditional PCs and smartphones remains steady but modest. If this AI boom isn’t a long term thing, that could be a problem for Micron which is up quite a bit this year already.

Stock Performance: The Cyclical Rollercoaster

To understand Micron’s stock, one must understand cyclicality. Historically, the memory industry goes through boom and bust cycles—periods of oversupply (low prices) followed by undersupply (high prices). That can cause revenue growth to be very volatile with cycles of growth and shrinkage as shown below(note that the 26 estimates are likely going up after this beat and outlook update).

1-Year Performance: The stock has seen a massive bump this year, significantly outperforming the S&P 500 as investors priced in the AI transition sending the stock up 107.8% in the last year and likely more after the market opens today.
5-Year Performance: Over the last five years, the stock has trended upward but with massive volatility. Long-term investors have been rewarded with a 216% bump in stock price in the last 5 years, but only those with the stomach for 30-50% drawdowns during the bust years as a good portion of those gains have come recently due to the AI boom.

Current sentiment suggests that the AI cycle may be longer and more structural than previous cycles, potentially dampening the typical bust phase but given the significant price appreciation we’ve seen, if we cycle back to oversupply then this drawdown could be a lot more significant.

Analyst Q&A: Key Takeaways

During the conference call, analysts focused heavily on supply sustainability and competition. Here is how management handled the tough questions:

On Supply/Demand Balance: When asked if they were worried about an eventual oversupply of HBM, management answered that the transition to HBM actually reduces overall industry supply. HBM takes up about 3x the wafer capacity of regular DRAM, meaning as more HBM is made, there is less capacity for everything else, keeping the market tight.
On Capex Spending: Questions were asked about the jump to $20 billion in CapEx. Management clarified that much of this is for long-term construction (like the Idaho and New York fabs) which won’t hit supply until much later, ensuring they don’t flood the market today and should set them up well for the future.
On Share Repurchases: Management confirmed they resumed buybacks ($300 million this quarter) and plan to increase them as free cash flow grows, signaling confidence in the current stock price.

Valuation: Is it a Buy?

The Case for a Buy:

Even at current prices, Micron’s forward P/E (Price-to-Earnings) ratio remains reasonable because the earnings (the “E” in P/E) are growing so fast. If Micron hits its $8.42 EPS target for next quarter, the annualized earnings power is close to $30 per share. At a stock price around $240, this is a cheap multiple against that and a 20x multiple could bring this up to $600 if you believe this cycle has long term lasting power.

The Case for Caution:

Cycles are messy. Right now earnings look great on paper but if you believe we are at the peak of the AI cycle, the valuation is risky. In cyclical stocks, you often want to buy when P/E is high (earnings are low) and sell when P/E is low (earnings are at a peak). If you look at historical and projected earnings, you can see that the expected EPS is expected to be consistent for a few years now(and 26 is understated as it’s still based on the prior outlook) and that’s a rare things for a company like Micron. If the AI cycle is here to stick around then this is a great value but if it’s slowing down then I’m not sure sure.

Final Verdict: For long-term investors, Micron remains an essential AI play. While the stock has had a big run, the fundamental shift in memory demand from commodity to AI-essential suggests that this cycle has more room to run and if that’s true then this is still at a reasonable value against other plays in this space especially with the crazy margins we’re seeing these days. These earnings are making me think about starting a position. However, investors should be prepared for the inherent volatility that comes with any semiconductor name. I do wonder if Broadcom’s recent earnings will be repeated here as the market is wary about the AI trade although the valuation here is a lot more reasonable if AI is here to stay.

Disclaimer: I am long AVGO, GOOGL, MSFT, META. This article is for informational purposes only and does not constitute financial or investment advice. The author is not a registered investment advisor. All investment strategies and investments involve risk of loss. Nothing contained in this article should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit. Please consult with a professional financial advisor before making any investment decisions.