Earnings Call Insights: Micron Technology, Inc. (MU) Q1 2026
Management View
- Sanjay Mehrotra, CEO, President & Chairman, reported “an outstanding start to fiscal 2026, delivering fiscal Q1 revenue, gross margin and EPS well above the high end of our guidance.” He highlighted record achievements in total company revenue, DRAM and NAND revenue, HBM, data center revenue, and each business unit.
- Mehrotra stated that Micron has “completed agreements on price and volume for our entire calendar 2026 HBM supply including Micron’s industry-leading HBM4,” and forecasted an HBM total addressable market (TAM) CAGR of approximately 40% through calendar 2028 from $35 billion in 2025 to around $100 billion in 2028. He noted, “This $100 billion HBM TAM milestone is now projected to arrive 2 years earlier than in our prior outlook.”
- The CEO emphasized ongoing tight supply, stating, “Sustained and strong industry demand, along with supply constraints are contributing to tight market conditions and we expect these conditions to persist beyond calendar 2026.”
- Mehrotra described technology leadership in DRAM and NAND, with the 1-gamma DRAM node “ramping well” and G9 NAND node ramping with robust yields, and pointed to multiple advanced node transitions as key supply growth drivers.
- He announced an increase in fiscal 2026 CapEx to approximately $20 billion, up from a prior estimate of $18 billion, with a focus on HBM supply and 1-gamma technology.
- Mark Murphy, Executive VP & CFO, stated, “Micron delivered strong financial results for the fiscal first quarter with revenue, gross margin and EPS, all exceeding the high end of our guidance.” He reported record free cash flow and a reduction in debt, with the company returning to a net cash position.
Outlook
- Micron anticipates “substantial new records in revenue, gross margin, EPS and free cash flow for both the second quarter and the full fiscal year 2026,” per Mehrotra.
- Murphy guided, “We expect revenue to be a record $18.7 billion, plus or minus $400 million. Gross margin to be in the range of 68% plus or minus 100 basis points; and operating expenses to be approximately $1.38 billion plus or minus $20 million. Based on a share count of approximately 1.15 billion shares, we expect EPS to be a record $8.42 per share plus or minus $0.20.”
- Micron plans to “increase our fiscal 2026 CapEx to approximately $20 billion versus our prior estimate of $18 billion,” driven by HBM and 1-gamma supply investments.
- The company expects DRAM and NAND bit shipments to grow approximately 20% in calendar 2026, but noted ongoing supply constraints.
Financial Results
- Total fiscal Q1 revenue was $13.6 billion, up 21% sequentially and up 57% year-over-year, setting a quarterly record for the third consecutive quarter.
- DRAM revenue reached $10.8 billion, with a 20% sequential increase, and NAND revenue reached $2.7 billion, up 22% sequentially.
- The consolidated gross margin was 56.8%, up 11 percentage points sequentially.
- Murphy reported, “Fiscal Q1 free cash flow was a quarterly record, exceeding our prior record in fiscal Q4 2018 by over 20%.”
- Operating income for the quarter was $6.4 billion, and non-GAAP diluted EPS was $4.78, representing 58% sequential growth.
Q&A
- Timothy Arcuri, UBS, asked about customer LTAs and their duration, to which Mehrotra said these are “multiyear contracts that we are in discussions with several of our key customers,” with “specific commitments in them and much stronger contract structure.”
- Arcuri inquired about CapEx intensity; Murphy responded that capital intensity is dropping, and “a substantial part of that CapEx is to support DRAM and specifically HBM and the 1-gamma and 1-gamma ramp.”
- Christopher Muse, Cantor Fitzgerald, asked if CapEx growth is constrained by fab space. Murphy explained, “Node transitions were going to be the principal source of supply growth in fiscal ’26 and that’s exactly what’s happening… There is no near-term solution.”
- Muse also asked about gross margins as technology transitions occur. Murphy noted, “Our cost execution has been very good across both DRAM and NAND… Yields have been good. We do have some start-up costs coming in for the new fabs… but it’s a relatively small impact on margin.”
- Harlan Sur, JPMorgan, asked about managing HBM3E and HBM4 supply; Mehrotra confirmed, “2026 supply on HBM will be tight, non-HBM DRAM will be tight as well.”
- Thomas O’Malley, Barclays, asked about HBM’s contribution to DRAM and the competitive landscape. Mehrotra reiterated, “We feel very good about our competitive position” and highlighted strong product specs and profitability.
- Sreekrishnan Sankarnarayanan, TD Cowen, asked about gross margins beyond Q2; Murphy responded that margins can be up, “but we would expect that growth to be more gradual than what we’ve seen in the last couple of quarters.”
- Chris Danely, Citi, asked about the timing of long-term contracts and customer contributions to fab builds. Mehrotra did not provide specifics but said contracts under discussion are “far stronger” than prior agreements.
Sentiment Analysis
- Analysts maintained a positive but probing tone, focusing sharply on supply constraints, CapEx philosophy, and long-term contract specifics, signaling strong interest in both growth and disciplined investment.
- Management tone was confident and assertive during prepared remarks, highlighting record performance and strategic execution. During Q&A, they maintained confidence but occasionally deferred on specifics, especially regarding contract details and competitive positioning. Mehrotra repeatedly emphasized structural tightness and Micron’s strong competitive stance.
- Compared to the previous quarter, both analysts and management demonstrated increased focus on supply limitations and CapEx discipline, with management projecting even greater confidence in future performance.
Quarter-over-Quarter Comparison
- Guidance for DRAM and NAND bit demand growth in 2025 was raised to the low 20% range for DRAM and high teens for NAND, from high teens and low/mid-teens, respectively, in the previous quarter.
- Micron accelerated its HBM TAM projection, now expecting to reach $100 billion by 2028, two years sooner than previously stated.
- CapEx guidance increased from a prior estimate of $18 billion to $20 billion for fiscal 2026.
- Management’s tone grew more assertive on supply constraints and customer contract strength, while analysts heightened scrutiny around CapEx and supply flexibility.
- The Q&A revealed more urgency around capacity expansion and contract structure than in the prior quarter.
Risks and Concerns
- Mehrotra acknowledged, “Despite significant efforts, we are disappointed to be unable to meet demand from our customers across all market segments.”
- Ongoing supply constraints for both DRAM and NAND are expected to persist through and beyond 2026.
- Management cited risks related to cleanroom space build-out lead times and potential new tariffs, which are not included in guidance.
- Analysts repeatedly pressed management for more details on contract terms, CapEx allocation, and supply response to ongoing demand surges.
Final Takeaway
Micron’s management emphasized that the company is operating in an exceptionally tight supply environment across DRAM and NAND, with demand driven by accelerating AI adoption and data center expansion. With HBM TAM now expected to hit $100 billion by 2028—two years ahead of the previous outlook—and record financial performance in Q1, the company is increasing CapEx and accelerating supply investments while signaling robust pricing, disciplined cost control, and differentiated technology leadership. Management remains confident in the company’s positioning to benefit from these secular trends, despite acknowledged supply limitations and heightened capital intensity.