MU — Micron Technology, Inc.

Summary of Micron Technology, Inc. Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: $23.9 billion, up 75% sequentially and 196% year-over-year, marking the fourth consecutive quarterly revenue record.
• DRAM Revenue: $18.8 billion, up 207% year-over-year, representing 79% of total revenue.
• NAND Revenue: $5 billion, up 169% year-over-year, accounting for 21% of total revenue.
• Gross Margin: 75%, up 18 percentage points sequentially and nearly doubled from the previous year.
• Operating Income: $16.5 billion, with an operating margin of 69%.
• EPS: Non-GAAP diluted EPS of $12.20, reflecting 155% sequential growth and 682% year-over-year growth.
• Free Cash Flow: Record $6.9 billion, up 77% from the previous quarter.
• Net Cash Position: Highest in company history at $6.5 billion.

2. Strategic Updates and Business Highlights:

• Micron's memory and storage solutions are positioned as critical enablers of AI, with strong demand driven by AI applications.
• The company signed its first five-year Strategic Customer Agreement (SCA), aimed at providing better visibility and stability in supply commitments.
• Progress in ramping industry-leading 1γ DRAM and G9 NAND technology, with expectations for these nodes to dominate product mix by mid-2026.
• Significant advancements in HBM4 production, with volume shipments initiated and expectations for mature yields faster than HBM3E.
• Continued investment in R&D and capital expenditures, with fiscal 2026 CapEx projected to exceed $25 billion.

3. Forward Guidance and Outlook:

• Fiscal Q3 Revenue Guidance: Expected to reach a record $33.5 billion, with gross margin projected at approximately 81%.
• Fiscal 2026 Tax Rate: Anticipated around 15.1%.
• Long-term Demand: Both DRAM and NAND bit demand expected to remain constrained by supply, with industry bit shipments projected to grow in the low-twenties percentage range for DRAM and approximately 20% for NAND in calendar 2026.

4. Bad News, Challenges, or Points of Concern:

• Supply Constraints: Ongoing tight supply conditions for both DRAM and NAND could lead to demand destruction in consumer markets like PCs and smartphones, with expectations of low double-digit declines in unit shipments.
• Customer Fulfillment: Currently fulfilling only 50-66% of demand from key customers, indicating challenges in meeting market needs.
• Market Sensitivity: The company acknowledged potential impacts from trade or geopolitical developments, which are not factored into guidance.

5. Notable Q&A Insights:

• Sustainability of Margins: Management discussed the sustainability of high gross margins, attributing them to AI-driven demand and supply constraints, but refrained from providing specific guidance for Q4.
• Strategic Customer Agreements (SCAs): SCAs are designed to provide both Micron and its customers with stability and predictability in supply, differing from previous LTAs by being multiyear agreements.
• Allocation Challenges: The company is balancing supply across various end markets, with a focus on maintaining a diversified customer base amidst tight supply conditions.
• Future Investments: Plans to increase capital expenditures significantly in fiscal 2027 to support long-term demand opportunities, particularly in HBM and DRAM.

Overall, Micron Technology, Inc. reported exceptional financial results driven by strong demand for memory products, particularly in AI applications, while navigating supply constraints and planning for future growth through strategic investments and customer agreements.