Micron's DRAM Success: A Look at the Company's Record-Breaking Performance

Gate’s analysis of Micron Technology’s fiscal 2025 reveals an exceptional year for the company’s Dynamic Random Access Memory (DRAM) division. The tech giant posted DRAM revenues of $28.6 billion, marking a substantial 62% increase from the previous year. The fourth quarter was particularly impressive, with DRAM sales accounting for $9 billion, or roughly 80% of Micron’s total quarterly revenue.

This remarkable growth can be attributed to increased demand across various sectors, including data centers, personal computers, mobile devices, and the automotive industry. Favorable pricing conditions, driven by limited DRAM supply, also played a significant role. A standout performer in Micron’s portfolio was its high-bandwidth memory (HBM) chips, crucial components in AI servers. HBM sales reached nearly $2 billion in the fourth quarter alone, achieving an annualized run rate of approximately $8 billion.

Micron’s innovative 1-gamma DRAM technology has also begun shipping, which is expected to further boost the company’s top-line growth. Looking forward, the company anticipates sustained strong demand, particularly from AI-related technologies. AI servers, smartphones, and PCs are increasingly requiring more memory capacity.

The DRAM market is currently experiencing tight supply conditions due to lean inventories and slower supply growth across the industry. Micron projects industry-wide DRAM demand to grow in the high-teens percentage range for calendar 2025, while its own bit supply growth is expected to remain below industry levels. This supply-demand imbalance could lead to price increases, potentially expanding profit margins.

These market conditions have already positively impacted Micron’s profitability, with gross margins improving to 41% in fiscal 2025, up from 24% the previous year. For the first quarter of fiscal 2026, Micron anticipates revenues of approximately $12.5 billion, with gross margins expected to exceed 51%. The Zacks Consensus Estimate for first-quarter revenues stands at $12.14 billion, suggesting a year-over-year increase of 39.3%.

Micron in the Competitive Landscape

In the data storage market, Micron faces competition from companies like Western Digital Corporation and Seagate Technology Holdings plc.

Western Digital, a diversified storage company, competes with Micron in the NAND market. Western Digital’s portfolio encompasses both traditional hard disk drives (HDDs) and NAND-based solid-state drives (SSDs).

Seagate Technology is a major player in the HDD market, particularly for high-capacity storage solutions catering to data centers and cloud infrastructure. The company is also expanding its presence in the SSD market through portfolio diversification and strategic partnerships.

Market Performance and Future Outlook

Micron’s shares have seen impressive growth, surging approximately 86.1% year-to-date, outpacing the Zacks Computer – Integrated Systems industry’s growth of 41.4%.

From a valuation perspective, Micron trades at a forward price-to-sales ratio of 3.43, slightly below the industry average of 3.86.

The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings suggests a year-over-year increase of roughly 64.8%. Notably, estimates for fiscal 2026 have been revised upward in recent days.

Given its strong performance and positive outlook, Micron Technology currently holds a Zacks Rank #1 (Strong Buy) rating.