Micron Reports a Record $41.5 Billion Quarter and Forecasts $50 Billion Next as AI Memory Demand Surges

A record quarter, by almost every measure

Micron Technology (Nasdaq: MU), the Idaho-based memory-chip maker, told investors on June 24 that revenue for its fiscal third quarter, which ended May 28, reached $41.46 billion. That is up 74% from the prior three months and more than four times the $9.30 billion of a year earlier, according to its earnings release. Profit climbed faster still. Net income was $28.24 billion, or $24.67 a share, against $1.89 billion in the same quarter last year. Gross margin, the share of revenue left after the direct cost of making the chips, reached 84.6%, up from 37.7% a year earlier and a level almost unheard of in the memory business. Micron produced $25.39 billion of cash from operations and closed the quarter with $30.2 billion in cash and investments. The board declared a quarterly dividend of 15 cents a share.

Why memory is suddenly so profitable

Memory chips, the DRAM and NAND that hold data in phones, computers, and servers, have long been a boom-and-bust business, with prices that swing hard as supply catches up with demand. What changed is artificial intelligence. The accelerators that train and run AI models need vast amounts of high-bandwidth memory, or HBM, which stacks DRAM chips on top of one another to move data far faster than ordinary memory. That demand has outrun what the three big memory makers can produce. Micron said its output is effectively sold out, and the squeeze runs across its lines. Revenue from its cloud memory unit nearly doubled from the prior quarter to $13.77 billion, its core data center unit more than doubled to $11.52 billion, and its mobile and automotive units also posted sharp gains. The company pointed as well to new multi-year Strategic Customer Agreements, contracts that lock in supply and pricing with its largest buyers. Chief Executive Sanjay Mehrotra said the agreements should make Micron’s results more durable and predictable, a notable claim in an industry known for sudden reversals.

The forecast: $50 billion and rising

Micron’s guidance points to even bigger numbers ahead. For the fiscal fourth quarter, which ends in late August, the company expects revenue of about $50 billion, give or take $1 billion, and gross margin of roughly 86%. It guided to diluted earnings of $30.73 a share at the midpoint, against $24.67 just reported. Meeting that would push annual revenue far beyond anything in Micron’s history. The build-out carries a cost. Micron spent $7.1 billion on plant and equipment in the quarter alone as it races to add capacity, and the same investment is underway at rivals Samsung and SK Hynix. More supply is the classic risk to memory pricing. For now, Micron’s prepared remarks and slides describe demand that still runs ahead of what the industry can build.

What to watch

1. The guidance test. Micron forecast about $50 billion in revenue and 86% gross margin for the quarter ending in August. The next report, due in late September, will show whether demand and pricing held up as promised.

2. Memory pricing and new supply. Today’s margins rest on memory being in short supply. Watch whether prices stay firm as Micron and its rivals bring new capacity online over the coming year.

3. The customer agreements. Micron is leaning on multi-year Strategic Customer Agreements to steady its results. Watch how much of future revenue these contracts cover and whether they hold if AI spending cools.