Micron Technology Q2 Earnings Call Highlights

Key Points

• Micron reported record fiscal Q2 results—$23.9 billion revenue, 75% gross margin, non‑GAAP EPS of $12.20 and record free cash flow—and guided fiscal Q3 well above prior years with revenue around $33.5 billion, gross margin ~81% and EPS ~$19.15.
• Management said AI is substantially boosting memory demand amid tight DRAM/NAND supply, leaving Micron able to meet only about 50–66% of customer demand in the medium term and prompting multi‑year strategic customer agreements to secure visibility and stability.
• Micron is accelerating capacity expansion with fiscal 2026 capex now expected above $25 billion, the Tongluo site acquisition, a new NAND fab in Singapore, and HBM4 volume shipments and packaging ramps planned to meaningfully add supply in 2027–2028.

Micron Technology NASDAQ: MU executives used the company’s fiscal second quarter 2026 post-earnings analyst call to emphasize what they described as continued tight memory supply conditions, strong pricing, and accelerating demand tied to AI infrastructure. Management also outlined an expanded capital spending outlook, discussed long-lead-time cleanroom constraints, and explained why the company is moving forward with additional NAND cleanroom expansion at its existing Singapore site.

NAND expansion tied to technology needs and data center SSD demand

In response to questions about Micron’s decision to add NAND cleanroom space, EVP of Global Operations Manish Bhatia said the move was not solely about adding wafer-start capacity. He said NAND bit growth can still be supported by technology transitions, but added that the company’s need for additional cleanroom space is being driven by “continued space consumption for those technology transitions,” upcoming transitions, and a decision to locate more NAND R&D in Singapore closer to manufacturing.

Chief Business Officer Sumit Sadana framed the decision around demand, saying Micron is seeing “very robust demand for NAND” driven by data center growth and AI servers requiring both high-capacity and high-performance SSDs. He highlighted Micron’s claim that it is the first company to have a PCIe Gen6 SSD in the market and said demand for those products has been strong, including in configurations used with NVIDIA systems. Sadana said Micron’s supply is “nowhere close” to meeting the demand it sees “for the foreseeable future,” though he also stressed “disciplined investing” around capital expenditures.

Management clarified that the NAND project is an expansion at an existing site rather than a new greenfield location. Bhatia also noted that the added cleanroom space is not expected to provide a capacity boost until the second half of 2028. He added that cleanroom availability remains a medium-term challenge for the NAND industry, particularly as some players have redirected NAND cleanroom space toward DRAM.

DRAM supply additions seen later; company reiterates expectation for tight conditions beyond 2026

Asked about the potential pricing impact of new DRAM supply projects coming online, Bhatia said Micron’s new ID1 shell project and the ramp at the Powerchip Tongluo facility that Micron has acquired are expected to affect “revenue shipments” around fiscal 2028. He said that timeline is broadly similar across large industry projects, with meaningful supply influence occurring “later in 2027 and really into 2028.” Based on that timing, Bhatia said Micron has reiterated expectations that tight supply conditions will continue beyond 2026.

Sadana added that customer demand forecasts for 2026 and 2027 “continue to escalate,” and said efforts to increase supply in 2026 and more in 2027 are “not really making that much of a meaningful dent in the gap.” CFO Mark Murphy also noted that Micron has the ability to “modulate tool installs,” describing that as an option to stay aligned with demand.

Pricing and volume commentary: Q2 strength; Q3 expectations led by price

Murphy declined to break out company guidance by DRAM versus NAND, but he provided directional color on recent performance and near-term expectations. He said both DRAM and NAND pricing rose strongly in fiscal Q2, with NAND pricing increasing more than DRAM. Both categories also saw sequential volume growth, though NAND volume growth was less than DRAM.

For fiscal Q3, Murphy said the company expects price to be the largest factor again. He added that industry bit shipments in calendar 2026 are constrained by supply and that Micron expects its supply growth to be in line with the industry. Based on those factors, he said analysts can assume “some modest” sequential volume growth in the third quarter for both DRAM and NAND.

HBM vs. non-HBM margins and allocation: “strategic” balance, not short-term shifts

In response to a question about margins and allocation between HBM and non-HBM DRAM, Sadana said relationships between product margins can change across quarters and acknowledged that the company had stated non-HBM margins were higher than HBM at this point in time. He noted that HBM pricing for a large portion of calendar 2026 shipments was set in late calendar 2025, consistent with how HBM is often negotiated in advance for stability and visibility.

Sadana said Micron believes the HBM pricing it negotiated provides “very robust ROI and profitability,” and he said the company has been able to sell upside HBM volumes at higher pricing as additional output materialized. However, he said Micron does not view HBM versus non-HBM allocation as a purely tactical decision, describing it instead as strategic due to the need to provide “match sets” of products for AI systems. He argued customers need a balance of HBM and other DRAM (such as DDR5), and said Micron does not “jerk around” allocations based solely on pricing.

CapEx raised; construction spending grows; costs and ramp items

Murphy said Micron increased its fiscal 2026 capital expenditure outlook to “over $25 billion,” up from $20 billion referenced on the prior earnings call. He said the updated investment reflects the Tongluo fab investment that Micron had communicated at a February conference and increases in U.S. expansion. He characterized the CapEx profile as still dominated by DRAM and HBM additions, with construction becoming a more material component due to the need for greenfield capacity.

Murphy said Micron expects fiscal 2026 construction spending to be in the “mid- to high-single-digit billions net,” emphasizing that the company discusses net CapEx. Looking to 2027, he said Micron projects approximately $10 billion of incremental construction cost (referencing the 2026–2027 period) and that equipment spending is also expected to rise. He added that NAND-related spending should begin to increase in 2027 but remain a much smaller portion than DRAM. Murphy said CapEx “could go down after 27,” but he declined to make that call, describing the company as investing through the next several years to add supply for customers.

On costs, Murphy said the company continues to execute well on cost reductions and pointed to benefits from node transitions, including 1-gamma in DRAM and G9 in NAND. Bhatia added that HBM3E 12-high execution has been strong and said Micron expects HBM4 to see a faster yield ramp than HBM3E 12-high, noting confidence in the HBM cost structure. Murphy also discussed startup costs related to bringing on ID1 and Tongluo, referencing prior commentary of 1–2 points of cost impact; he estimated that on a dollar basis this could be roughly $100 million to $200 million per quarter starting in the next quarter or so and continuing through 2027, with the impact declining thereafter.

Murphy also provided operating expense expectations, saying OpEx would tick up due to R&D spending. He said Micron expects fiscal Q4 OpEx to be closer to $1.6 billion, reflecting both an extra week and increased R&D, and said 2027 OpEx could be “over $1.6,” likely around a $1.7 billion run-rate before stabilizing.

About Micron Technology NASDAQ: MU

Micron Technology, Inc is a global semiconductor company that designs and manufactures memory and storage solutions. Its product portfolio includes dynamic random-access memory (DRAM), NAND flash memory, solid-state drives (SSDs), memory modules and embedded memory solutions for a wide range of computing and electronic devices. Micron supplies components used in data centers, enterprise and cloud infrastructure, client computing, mobile devices, automotive systems and industrial applications, and also markets consumer-facing products under the Crucial brand.

Founded in 1978 and headquartered in Boise, Idaho, Micron has grown into an international manufacturer with research, development and production facilities across multiple regions.

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