Every chatbot answer, cloud upload, and streaming recommendation leans on memory chips, and the supply of them is running thin. Micron (MU) has become one of the clearest winners of the AI buildout, with results that look nothing like its numbers a year ago.
The company spent years riding the ordinary ups and downs of the memory market. AI may be changing that pattern.
Investors still struggle to price that success, and the gap between great earnings and nervous trading keeps widening. After Micron’s June report, the stock slid 41% in 35 days despite a strong beat. The latest quarter, delivered on September 30, added another chapter to that unusual story.
Also read: Bank of America doubles down on Micron stock price for 2026
Micron says it cannot see when the shortage ends
Micron posted fiscal fourth-quarter revenue of $54.23 billion, up 379% from a year earlier. Adjusted earnings reached $33.42 per share, topping the $31.61 analysts expected. Gross margin hit 87%, ahead of the company’s own forecast. For the full fiscal year, revenue reached $133.19 billion, up 256%, CNBC reported.
The message on supply was blunt. CEO Sanjay Mehrotra said demand has strengthened since the previous call and that supply and demand should be much tighter in fiscal 2027 and 2028 than in 2026. Micron also said it has no line of sight on when supply will catch up.
Guidance pointed in the same direction. Micron expects first-quarter revenue of $60 billion to $63 billion and adjusted earnings of $37.15 to $39.15 per share. Gross margin is expected near 86.25%, and the company reported GAAP net income of $37.70 billion for the fiscal fourth quarter, Investing.com reported.
Wall Street gave the numbers a shrug. Micron shares barely moved in premarket trading after the report, even though the stock is up more than 270% this year. Analysts stayed mostly bullish, with Morgan Stanley maintaining its Overweight rating and a $1,200 price target.
Memory has always swung hard. Prices spike, makers add capacity, oversupply crushes pricing, and the cycle starts over.
Why new factories will not fix it anytime soon
Building supply is slow. Micron is adding memory and storage plants, but they will take years to finish. Even after the first wafers roll off the lines, it takes time to reach full production, with output only becoming meaningful after several quarters.
The spending is already huge. Micron projects capital spending of roughly $11.5 billion in the current quarter and about $25 billion across the first half of fiscal 2027. Some of that money funds facilities in Idaho, New York, Taiwan, Singapore and Japan, Investing.com reported.
Management expects DRAM and NAND conditions to stay tight beyond calendar 2027 and noted the shortage has lasted far longer than analysts predicted. More than 20 analysts covering the stock rate it a Buy or Strong Buy.
Rosenblatt analyst Kevin Cassidy pointed to Micron’s forecast for industry DRAM bit growth in the low 20% range in 2027 and 2028, down from the mid-20% range in 2026. High-bandwidth memory is harder to produce, he added. Mehrotra said more than 75% of output is already committed. Cassidy expects fiscal 2027 capital spending to top $50 billion.
Micron is trying to break the boom and bust pattern
Memory has always swung hard. Prices spike, makers add capacity, oversupply crushes pricing, and the cycle starts over. AI servers need far more memory than past products did, and new fabs take years to build.
Micron’s answer is the strategic customer agreement. It now has 26 signed, up from 16 last quarter, with commitments worth $32 billion. The company estimates those deals will cover 35% of its revenue through 2030.
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The agreements now stretch into 2031. Three-quarters of the estimated SCA revenue comes with a defined pricing framework.
Most of the agreements carry both price floors and ceilings, while the rest are priced on market conditions. Micron’s 2027 output is already committed, leaving a smaller pool of uncommitted supply available to the rest of the market.
Wells Fargo analyst Aaron Rakers said Micron’s next phase leans on investor confidence in how long the shortage lasts and how fast the agreements grow. He trimmed his price target to $1,400 from $1,525 and kept an Overweight rating, TheStreet reported.
Shoppers are already paying the bill
Samsung co-CEO TM Roh warned in January that the shortage was unprecedented and that no company was immune. He said higher prices for phones, TVs and appliances were inevitable. DDR5 RAM prices had more than doubled since Micron shut its consumer division.
Apple’s iPhone 18 Pro line reached stores with a $100 price bump in the first launch under CEO John Ternus. The base iPhone 18 Pro costs $1,199 and the base Pro Max costs $1,299, TheStreet reported.
Apple’s own costs keep climbing. Former CEO Tim Cook called the memory market a “100-year flood” and confirmed Apple has paid more for three straight quarters. Apple expects to pay more again in the fiscal fourth quarter.
TechInsights estimates the DRAM package in the iPhone 18 Pro costs Apple about $145, compared with roughly $39 in the iPhone 17 Pro. With no end in sight, the memory boom and its price tags are not going away anytime soon.
Related: Nvidia, SK Hynix send strong signal to Micron investors
