We’ll finally have a notable tech name to watch on the earnings calendar this week.
Micron will be reporting its fiscal fourth-quarter earnings on Wednesday, and expectations are hardly modest.
The company itself is guiding for revenue of around $50 billion, an adjusted gross margin of roughly 86% and adjusted EPS of close to $31.00. Meanwhile, market expectations are also thereabouts with $50.4 billion in revenue and $31.14 in EPS estimated ahead of the earnings call.
The numbers here follows from an already exceptional third quarter, when Micron delivered $41.46 billion in revenue and $25.11 in adjusted EPS.
But with most tech earnings, I think the headline numbers would almost certainly take a back seat. Perhaps the more interesting question is whether the AI boom is fundamentally changing the economics of the memory business.
At its core, memory has historically been brutally cyclical. Strong demand pushes up prices, manufacturers add capacity, then supply eventually catches up and the cycle turns.
But what makes this period more interesting is the sheer amount of high-bandwidth memory being absorbed by AI infrastructure, alongside Micron’s attempts to lock customers into longer-term supply commitments.
During the last quarter, Micron said that it had signed 16 strategic customer agreements with the majority of that representing roughly $100 billion in cumulative revenue at minimum contracted prices. The company also expects $22 billion in customer deposits and related financial commitments in addition to that, with many of the agreements stretch across multiple years and include price floors.
It’s quite refreshing as the revelation is something the memory industry has rarely enjoyed. That being much better visibility over demand, pricing and cash flow.
In terms of numbers, I would argue that gross margin will therefore be one of the numbers to watch more closely. An 86% guide is extraordinary by historical standards. The ball is over on Micron’s court to deliver on that, in reaffirming the numbers from the strategic agreements above.
Then, comes the outlook.
All else being equal, what Micron says about HBM demand, pricing, supply constraints and capacity into fiscal year 2027 may matter more than whether quarterly EPS beats expectations. For me, that’s the real test this week.
We already know that Micron is enjoying a spectacular memory boom. What investors need to figure out now is whether AI is extending the cycle or actually changing what a memory cycle looks like.
Micron’s earnings alone won’t be enough to settle the score there but it will at least give investors an indication of how to better price the cycle relative to what else is happening in broader markets, as surging Treasury yields threaten to do a number on tech shares.
This article was written by Justin Low at investinglive.com.