Research Report Analysis: JPMorgan Detailed Explanation of Micron's Quarterly Earnings, Buyer Sentiment, and Hardware Sector Recent Developments

Written by: Tide Research

Author: Rita

Tide Research Overview

On June 21, Joshua Meyers, a JPMorgan expert, released a report that synthesizes buyer-sentiment surveys before Micron’s earnings, pre-season research feedback from hardware companies, updates to AI capital expenditure forecasts, and developments from several key companies. The core message conveyed in the report is: Micron’s position in the storage track remains the most consensus bullish direction in the AI sector, but the sustainability of high gross margins and valuation methodologies are sparking discussion. In the hardware supply chain, demand related to AI servers, networking, and storage remains strong, but differentiation has emerged among individual stocks. This article is suitable for investors who focus on U.S. hardware and semiconductor sectors.

Three Key Conclusions

① Buyer sentiment before Micron’s earnings remains high, but two issues are simmering.

Meyers points out that storage is one of the most consensus bullish directions in the technology sector and even across the broader market. AI demand continues to improve, and recently, there has also been unexpected growth in demand for intelligent CPU units; the average selling price (ASP) is rising with each industry survey. Demand has indeed been disrupted to a certain extent, but the response from the supply side remains relatively restrained. The market generally expects Micron to announce more long-term agreements (SCA) in this earnings report, with about 75% of the surveyed buyers believing there will be additional signings. The focus of market attention is: Micron’s gross margin has already exceeded 80% and has triggered discussion—how the company views the room for AI applications to further boost ASP, and to what extent the specific terms of long-term agreements can be disclosed.

② Pre-season hardware supply chain survey: AI-related demand remains strong, with clear stock-level divergence.

Meyers summarizes pre-season communications with hardware and networking equipment companies. Celestica (CLS) has an improving profit-margin outlook and greater confidence in AI networking projects. Western Digital and Seagate benefit from continued improvements in pricing; in an environment with constrained supply, they do not need to concede prices when switching to next-generation products. Fabrinet (FN) is seeing enhanced predictability for growth in its AI optical module business—products related to Amazon are expected to contribute revenue starting this quarter and ramp up gradually. Teradyne (TER) expects second-half revenue to decline sequentially, but Google is expected to become its VIP compute new customer by year-end, becoming an important incremental driver for the next year.

③ AI capital expenditure forecasts are raised again, with 2027 WFE market growth projected at 29%.

JPMorgan’s global semiconductor team raised the 2026 wafer equipment (WFE) market growth rate from 21% to 28% (corresponding to $155 billion), and the 2027 rate from 18% to 29% (corresponding to $200 billion). DRAM, TSMC, Intel, and Samsung foundry operations are the main sources of incremental growth. The investment and financing model for AI infrastructure is also evolving—at the project level, the proportion of debt financing has increased to above 85%. Given that the market value of projects after completion is far higher than construction costs, the actual loan-to-value (LTV) is only about 60%, and the financing-side constraints on the expansion of AI capital expenditures are weakening.

Supply-chain signals behind Celestica’s improving profit margins

In the pre-season communications within the hardware supply chain, Celestica (CLS)’s feedback is worth highlighting separately.

Meyers points out that Celestica previously expressed concerns about the pricing of Tomahawk (Broadcom’s switch-chip). But in this round of communication, the company’s stance has clearly improved. The company is more confident in passing costs through via price increases, and it is also pursuing more rack-based AI networking projects—projects of this type tend to have thicker profit margins. Market expectations are that its FY26 operating margin will continue to expand, potentially by 10 to 20 basis points. The outlook for FY27 is even more optimistic: stable margin combined with the release of operating leverage may lead the company to provide more positive guidance in its next earnings report.

On the supply of AI chips, Celestica works with both Broadcom and MediaTek, and its confidence in the supply chain is clearly stronger than that of Arista Networks. Ultra-large-scale customers are receiving higher supply priority. This signal suggests that the demand pattern for AI networking equipment is still concentrating toward leading suppliers, and supply-chain allocation capability is becoming a competitive moat.

Short-term performance validation, long-term valuation anchor

Micron’s earnings report is the most direct catalyst right now. The market consensus has essentially priced in a strong quarter; the real variable is the level of detail disclosed in the long-term agreements. If the coverage of SCAs allows the market to see the visibility of future revenue, Micron’s valuation logic could be reshaped further.

Another key variable in the hardware sector is the demand timing. Distributors such as CDW report that a considerable portion of the current strong demand for servers and networking equipment comes from customers placing orders early because they are worried about further increases in tariffs. How long this front-loaded demand can last is the biggest uncertainty for the hardware sector in the second half.

Three tracking signals:

The level of detail of SCAs disclosed in Micron’s earnings report, and the gross margin outlook. Whether Arista Networks can raise its full-year guidance in the next earnings report. Whether Fabrinet’s Amazon optical module revenue can ramp up to $250 million per quarter within a year as expected.

Disclaimer

This article is a compilation and interpretation by Tide Research of reports from third-party brokerage research. The ratings, target prices, earnings forecasts, and related judgments cited in the article are the views of the brokerage’s analysts and represent only the position of their respective institutions; they do not represent Tide Research’s viewpoint, and do not constitute any investment advice.

When reading, please note three points: 1. Target prices are analysts’ expectations for the next approximately 12 months; they are forecasts rather than commitments and will be adjusted repeatedly based on performance and market conditions. 2. Sell-side research reports are naturally biased toward the upside, and some of the covered companies have investment banking relationships with the brokerage. 3. The value of research lies in its main logic and underlying assumptions, not in any single target price. Focus on the logic—don’t just look at the price.

There are risks in the market; decisions should be made independently. This article should not be used as a basis to buy or sell any securities.

Data sources: JPMorgan research report (Joshua Meyers et al., June 21, 2026) · Company public disclosures

Tide Research · TideResearch · June 2026

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