Micron targets $10.7B Q4 revenue as AI-driven memory demand accelerates

Earnings Call Insights: Micron Technology (MU) Q3 2025

Management View

CEO Sanjay Mehrotra highlighted that “Micron’s strong competitive position and solid execution delivered record revenue in fiscal Q3 with revenue, gross margin and EPS all exceeding the high end of our guidance ranges.” He emphasized that data center revenue more than doubled year-over-year and reached a record level, with consumer-oriented markets also experiencing strong sequential growth.
Mehrotra reported a nearly 50% sequential growth in HBM revenue and noted, “We remain the sole supplier in volume production of LPDRAM in the data center.” He also stated, “For the first time ever, during calendar Q1, Micron has become the #2 brand by share in data center SSDs according to third-party data.”
Strategic updates included the completion of a business reorganization around key market segments to capitalize on AI growth and the announcement of plans to invest approximately $200 billion in the U.S. over the next 20-plus years, with $150 billion allocated for manufacturing and $50 billion for R&D.
Mehrotra shared product milestones, including “the first qualification sample shipments of 1-gamma based LP5 DRAM,” and significant advancements in NAND technology with the ramp of G9 2-terabit QLC NAND.
CFO Mark J. Murphy stated, “Micron delivered strong results in fiscal Q3 with revenue, gross margin and EPS all above the high end of the guidance ranges provided in our last earnings call.” He added that total fiscal Q3 revenue was $9.3 billion, a quarterly record for Micron, with DRAM revenue up 51% year-over-year and NAND revenue up 4% year-over-year.

Outlook

Micron projects fiscal Q4 revenue of $10.7 billion, plus or minus $300 million. Gross margin is expected to be in the range of 42%, plus or minus 100 basis points, and operating expenses are projected at approximately $1.2 billion. EPS guidance is $2.50 per share, plus or minus $0.15.
Mehrotra described a “robust demand environment” and expects to grow revenue by 15% sequentially in Q4, reaching a record at the guidance midpoint. He stated, “We are confident that our strategic direction, innovation capabilities and the execution by our exceptional team will continue to create meaningful value for our shareholders, customers and employees.”
Murphy reiterated that “the overwhelming majority of the fiscal 2025 CapEx is to support HBM as well as facility, construction, back-end manufacturing and R&D investments,” and noted the fiscal 2025 capital spending plan remains unchanged at approximately $14 billion.

Financial Results

Total fiscal Q3 revenue was $9.3 billion, up 15% sequentially and up 37% year-over-year. DRAM revenue reached $7.1 billion and accounted for 76% of total revenue, while NAND revenue was $2.2 billion.
Consolidated gross margin was 39%, up 110 basis points sequentially. Operating income was $2.5 billion, yielding a 26.8% operating margin.
Free cash flows exceeded $1.9 billion, the highest in over six years. Inventory at quarter end was $8.7 billion or 139 days, down 19 days sequentially. Cash and investments stood at $12.2 billion.

Q&A

Timothy Michael Arcuri, UBS: Asked about HBM TAM scaling with accelerator TAM and long-term HBM demand. Mehrotra responded that HBM is expected to nearly double from $18 billion in revenue in 2024 to approximately $35 billion in 2025, with significant bit demand growth in 2026 and ongoing transitions to higher-value HBM products.
Vivek Arya, BofA Securities: Inquired about gross margin trajectory and sustainability. Murphy answered that favorable mix effects and better-than-expected pricing are driving margins higher, with “continued good market backdrop” and “favorable mix effects that is helping drive margins up to the current guide of 42%.”
Christopher James Muse, Cantor Fitzgerald: Sought clarification on HBM market share and timing. Mehrotra indicated Micron is already at more than a $6 billion run rate for HBM and may reach industry share targets earlier than previously expected due to strong execution and rapid ramp-up.
Thomas James O’Malley, Barclays: Asked about future normalized share and NAND utilization. Mehrotra explained that HBM has become an integral part of the portfolio and structural NAND capacity is being reduced by 10% by end of fiscal 2025.
Harlan L. Sur, JPMorgan: Asked about 2026 HBM supply commitments. Mehrotra confirmed HBM is sold out for 2025 and strong bit demand is expected in 2026.
Joseph Lawrence Moore, Morgan Stanley: Asked about long-term CapEx as a percentage of revenue. Murphy detailed ongoing investments and a flexible balance sheet.

Sentiment Analysis

Analysts focused on HBM growth, margin sustainability, and capacity expansion, with a slightly positive but probing tone reflecting high expectations and interest in upside scenarios.
Management conveyed confidence and optimism, frequently emphasizing strong execution and leadership in technology with repeated phrases like “we are well positioned” and “extremely pleased.” The tone remained confident during both prepared remarks and Q&A, with no notable defensiveness.
Compared to the previous quarter, both analysts and management exhibited increased confidence, especially regarding HBM growth and the company’s ability to reach or surpass market share goals ahead of schedule.

Quarter-over-Quarter Comparison

Current guidance for Q4 calls for revenue of $10.7 billion, marking a sequential growth target, compared to the previous quarter’s focus on robust quarterly ramp and share gains in HBM.
Strategic focus has intensified on AI-driven demand, business reorganization, and large-scale U.S. investments, while the prior quarter highlighted rapid shifts to 12-high HBM and supply discipline.
Analysts’ questions continued to center on HBM, margin expansion, and supply, but with more discussion on long-term sustainability and capacity growth.
Management’s confidence has grown, with more explicit forward-looking statements about record revenue and leadership in key technology segments.

Risks and Concerns

Management noted that potential new tariffs could impact results, though these effects are not included in the guidance.
There may have been some modest tariff-related pull-ins by certain customers, but customer inventory levels are said to be healthy overall.
The company is managing NAND node conversions at a measured pace to align with demand and mitigate risks of overcapacity.
End-of-life transitions in D4 and LP4 products are underway, leading to some product shortages, but management is working with customers to support near-term demand.

Final Takeaway

Micron’s third quarter showcased record results across revenue, gross margin, and EPS, driven by strong AI-related demand and robust execution in HBM and data center markets. The company’s outlook projects further sequential growth and record revenue in Q4, underpinned by continued leadership in DRAM and NAND technology, disciplined investments, and a strategic business unit reorganization to capitalize on the expanding AI opportunity. Management remains confident in its trajectory toward sustained growth, profitability, and shareholder value creation.

Read the full Earnings Call Transcript