The memory chipmaker delivered what many on Wall Street called a perfect quarter — record revenue, a gross margin that briefly overtook Nvidia’s, and forward guidance that shattered consensus. Micron Technology posted $41.5 billion in revenue for the third quarter of fiscal 2026, a 346% jump from the year-ago period, and non-GAAP earnings of $25.11 per diluted share. Analysts had been expecting $35.1 billion on the top line and $20.39 in EPS. But when the stock touched an all-time high of €1,103.80 on Thursday, June 25, and then slumped to €995.60 the next day — a single-session loss of 6.52% — the message was clear: investors were looking past the dazzling numbers and fixating on the enormous capital outlays required to sustain them.
The unease stems partly from the sheer scale of the company’s investment plans. This fiscal year, capital expenditures are expected to hit roughly $27 billion, and for 2027 management has guided for spending above the midpoint of the $40 billion-plus range. The bulk of the increase is earmarked for fabrication plants and cleanroom capacity, including the $100 billion megacampus in New York, where first wafer production is not anticipated until around 2030. While the long-term logic is hard to dispute — demand for High Bandwidth Memory is projected to outstrip supply through 2028 — the near-term cash burn prompted some profit-taking after the stock had already surged more than 270% year to date.
Micron’s leadership is betting that a new contractual framework will break the industry’s infamous boom-bust cycles. The company has inked 16 take-or-pay agreements with strategic customers, covering roughly 20% of DRAM capacity and one-third of NAND capacity. The contracts run through 2030, carry pricing floors above historic peak margins, and lock in a minimum volume commitment of $100 billion. So far, $18 billion of the $22 billion in customer prepayments has already been received in cash. CEO Sanjay Mehrotra said on the earnings call that the agreements span data centers, consumer products, and automotive end markets, providing “significantly more visibility than in prior cycles.”
Should investors sell immediately? Or is it worth buying Micron?
The third-quarter performance itself was a study in momentum. DRAM sales contributed $31.3 billion, while NAND added nearly $9.9 billion. The gross margin hit 84.9%, briefly eclipsing the margin of ai chip leader Nvidia. For the current quarter, management guided revenue of $49 billion to $51 billion — well above the prevailing analyst estimate of $43.2 billion — and a gross margin of 86%, which would mark another record. The company also declared a dividend of $0.15 per share. With its HBM3E and next-generation HBM4 chips fully booked through the end of calendar 2026, the supply-demand imbalance is expected to persist well into next year.
Wall Street responded to the earnings release with a flurry of price-target upgrades. Melius Research set a target of $2,200, likening the business model to a software-as-a-service provider because of the recurring revenue from long-term contracts. Susquehanna lifted its target to $2,000, JPMorgan to $1,540, and Morgan Stanley to $1,200. On a technical level, the relative strength index had entered overbought territory midweek but settled at 59.7 after the selloff, suggesting the stock is no longer stretched by that measure. Even after the Friday decline, the shares posted a modest weekly gain of 0.41%.
The tension between Micron’s structural improvements and the market’s cyclical skepticism is unlikely to dissipate quickly. The take-or-pay contracts de-risk the order book, but the $27 billion-plus capital spending plan reintroduces the kind of financial leverage that has rattled investors in past memory downturns. For now, the company is walking a tightrope between locking in future demand and betting billions on capacity that won’t come online for years. Whether “this time is different” remains an open question — but the quarterly numbers suggest Micron has at least earned the right to ask it.
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