A year ago, Micron Technology posted $11.32 billion in quarterly revenue and about $2.83 in diluted earnings per share. When it reports fiscal fourth-quarter results on September 30, the company has guided to $50.0 billion in revenue and $31.00 in non-GAAP earnings per share. That is not a typo, and it is not a one-quarter anomaly.
Intel CEO Lip-Bu Tan, speaking at the AI Infrastructure Summit in Santa Clara on September 15, said the memory shortage will grow more severe. He told the audience that many projects are being delayed because they cannot secure enough memory, and that memory prices have risen five to seven times. He also warned that low-cost smartphones and laptops now face a reality where 70% to 80% of the device’s cost has to be spent on memory alone.
Those remarks immediately moved markets. Micron jumped more than 5% Thursday as memory stocks rallied. SK Hynix also gained about 5%, while the Nasdaq rose about 1.7% following Wednesday’s Federal Reserve decision. Tan’s comments were not news to anyone watching the sector closely, but a CEO of his stature putting specific numbers on the magnitude of the shortage gave the market a fresh reason to reset expectations for the winners.
Why Micron Sits at the Center
Micron makes two kinds of memory chips: DRAM, the working memory a computer uses while running, and NAND, the storage that holds data when the power is off. AI servers need far more DRAM per machine than ordinary servers, and a specialized version called high-bandwidth memory, or HBM, which stacks DRAM chips to move data faster to the processor. Memory supply could not expand fast enough. Prices went up instead.
Fiscal third-quarter revenue reached $41.46 billion, up from $9.30 billion a year earlier, while non-GAAP gross margin was 84.6%. The company guided to $50.0 billion in fourth-quarter revenue and about an 86% gross margin. HBM3E and HBM4 products are fully booked through 2027, with demand extending into 2028. Micron said in June that 14 of its first 16 strategic customer agreements carried approximately $100 billion in cumulative revenue at minimum pricing over the remaining agreement terms, with price bands designed to give Micron and customers more visibility through the memory cycle.
The Bull Case and the Risk
The structural argument for Micron is straightforward: past shortages, like those in 2017 to 2018 and 2021, were driven by temporary demand spikes that manufacturers eventually outbuilt. This shortage is being sustained by long-term AI accelerator demand for high-bandwidth memory, which competes for the same fabrication capacity as consumer DRAM and NAND. Tan expects memory shortages to persist until at least 2028.
The bear case is written into the valuation itself. At roughly $975 per share and a market value near $1.1 trillion, the stock trades at roughly 8 times annualized current earnings if the company sustains something like its $31-per-quarter run rate. That is the market saying it does not expect this level of profit to persist. TrendForce expects DRAM contract price increases to moderate to 13% to 18% quarter over quarter in the third calendar quarter of 2026, and consumer buyers in PCs and smartphones have reached the limit of what they will pay. Micron lost money as recently as fiscal 2023. Anyone buying here is betting the AI-driven cycle is different enough from prior ones to sustain margins well above historical norms.
What to Watch on September 30
The headline numbers almost certainly clear guidance. The real information will come from what Micron says about fiscal 2027 demand, HBM pricing trends, and whether strategic customer agreements continue expanding. TrendForce nevertheless expects a tight DRAM market to keep prices elevated in 2027 even as the NAND market moves toward looser supply later in the year as new capacity comes online. If management reaffirms that view and extends contracted revenue visibility, the low earnings multiple becomes a harder argument for bears to hold.
Tan’s warning was aimed at founders looking for problems to solve. For Micron investors, it reads as a confirmation that the company’s pricing power has years left, not quarters. September 30 will tell us how much of that future the market is already pricing in.
