The Memory Party Continues

Extremely strong earnings from $MU
So bullish
Here’s the info you need to know:
Q4 guidance blew past estimates: $50B in revenue, 86% gross margin, and $31 EPS, versus expectations of $44B and $26. Mehrotra tied the strength directly to memory’s changing role: "Micron's record fiscal Q3 financial results and even stronger outlook for Q4 reflect the strategic value of memory in the AI era." At $31 EPS, Micron is annualizing north of $120, representing a modest 10x P/E
Gross margin hit 84.9%, a company record, up from 39% a year ago. On the SCAs underpinning the durability of those margins, Mehrotra said: "We believe our multi-year Strategic Customer Agreements will significantly enhance the durability and predictability of Micron's strong financial performance."
16 Strategic Customer Agreements were signed, up from one last quarter, locking in three to five years of supply. Mehrotra explained how far this reaches: "When completed, we expect approximately half or more of our company revenue to be under these"
Customers are now contracting memory like a scarce strategic input, not buying it on the spot market. Mehrotra explained why: "Our customers are recognizing that supply shortages in memory and storage will take considerable time to improve, even as we expect industry supply to improve gradually in 2028."
Tightness is explicitly multi-year, not a quarter or two of scarcity. Mehrotra said market tightness is "locked in to persist beyond calendar 2027" amid the AI buildout and the industry-wide pivot toward HBM, which is crowding out DRAM availability
Record capex is being justified by the contracted demand behind it. A central thread of the prepared remarks was the acceleration of capex into Q4 and FY2027, with "the new SCA-oriented structure helps justify and secure the CapEx spending", including a multi-year ASML EUV agreement and new fabs across Idaho, New York, Virginia, Taiwan, Singapore, and Japan
HBM4 is ramping faster than the prior generation, undercutting the "laggard behind SK Hynix" narrative. From the prepared remarks, the HBM4 12-high ramp is "tracking twice as fast" as HBM3E 12-high, with over $1B in HBM4 revenue already shipped
Capital returns are coming, funded by record cash generation, not leverage. Management said it expects to "return 100% of our excess cash to shareholders." The quarter closed with $24.4B in net cash and record free cash flow
Micron is now being run as an AI infrastructure supplier, not a consumer-cycle memory company. Mehrotra framed the spending around that demand: "Micron is investing at record levels in technology, products and supply to address our customers' rapidly growing demand." Data center revenue is running above a $100B annualized rate, with data center SSDs alone past $5B and doubling sequentially