Earnings Call Insights: Micron Technology, Inc. (MU) Q4 2025
Management View
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CEO Sanjay Mehrotra highlighted a strong finish to fiscal 2025, stating, “Micron had an outstanding finish to fiscal 2025, delivering fiscal Q4 revenue, gross margin and EPS all above the high end of our updated guidance ranges.” Mehrotra reported record annual revenue of $37.4 billion, driven by pricing execution and performance across end markets, with gross margin expanding by 17 percentage points to 41%.
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Mehrotra explained that the company achieved more than a fivefold increase in revenue from HBM, high-capacity DIMMs, and LP server DRAM, reaching $10 billion, and emphasized that “data center SSD business leased record revenue and market share in fiscal 2025.”
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On technology leadership, Mehrotra announced, “our 1-gamma DRAM node reached mature yields in record time, 50% faster than in the prior generation,” and that the company is the first in the industry to ship 1-gamma DRAM. He also noted the ramp of G9 NAND for enterprise storage and the installation of the first EUV tool in the Japan fab.
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Expansion plans included a CHIPS grant disbursement for the new Idaho manufacturing fab, initial design work for a second Idaho fab, and ongoing environmental studies in New York. HBM assembly and test investments in Singapore are on track to contribute in 2027.
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Mehrotra outlined robust AI-driven demand, stating, “AI-driven demand is accelerating, and industry DRAM supply is tight,” and emphasized Micron’s competitive positioning: “Our HBM performance has been strong and robust demand, tight DRAM supply and disciplined execution has significantly strengthened the profitability of the rest of our DRAM portfolio.”
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CFO Mark Murphy reported, “Micron delivered strong results to close out the fiscal year with Q4 revenue, gross margin and EPS, all exceeding our updated guidance. For the full year, we achieved record revenue of $37.4 billion, up 49% year-over-year. Gross margins expanded to 41%, a 17-percentage point improvement from fiscal 2024. EPS reached $8.29, reflecting a 538% increase compared to the prior year.”
Outlook
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The company guided for fiscal Q1 2026 revenue to be a record $12.5 billion, plus or minus $300 million. Gross margin is expected to be 51.5%, plus or minus 100 basis points, and operating expenses around $1.34 billion, plus or minus $20 million. Non-GAAP EPS guidance is $3.75 per share, plus or minus $0.15.
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Murphy stated, “We expect price, cost and mix to all contribute to strengthening gross margins in Q1.” He projected free cash flow to strengthen and “significantly higher annual free cash flow year-over-year in fiscal 2026.”
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CapEx is expected to increase in fiscal 2026, with the majority directed to DRAM front-end equipment and fab construction, mainly supporting 1-gamma node migration and HBM growth.
Financial Results
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Total fiscal Q4 revenue was $11.3 billion, up 22% sequentially and up 46% year-over-year. DRAM revenue reached $9 billion, up 69% year-over-year and represented 79% of total revenue; sequential DRAM revenue increased 27%. DRAM bit shipments increased in the low-teens percent, with prices up in the low double-digit percentage range.
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Fiscal Q4 NAND revenue was $2.3 billion, down 5% year-over-year but up 5% sequentially. NAND bit shipments declined in the mid-single-digit percentage range, while prices increased in the high single-digit percentage range.
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Murphy noted, “The consolidated gross margin for fiscal Q4 was 45.7%, up 670 basis points sequentially.” Operating income for the quarter was $4 billion (operating margin 35%). Non-GAAP diluted EPS for Q4 was $3.03, up 59% sequentially and 157% year-over-year.
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Operating cash flows in Q4 were $5.7 billion, with capital expenditures of $4.9 billion and free cash flows of $803 million. Ending inventory for Q4 was $8.4 billion or 124 days, down $372 million sequentially.
Q&A
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Timothy Arcuri, UBS: Asked about revenue split between DRAM and NAND for Q1 and gross margin factors. Murphy responded that “in the first quarter, will be heavier DRAM mix than NAND in that growth” and expects “price, mix and strong execution to drive that 580 basis point margin expansion.”
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Arcuri inquired about updated HBM TAM and milestones. Mehrotra stated, “by 2030, we expect HBM TAM to reach $100 billion,” and reaffirmed strong positioning and growth prospects for HBM and overall memory in the AI cycle.
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Vivek Arya, BofA Securities: Asked about HBM3E to HBM4 transition timing, pricing, and share. Mehrotra indicated HBM4 production shipments begin in CQ2 2026, with ramps through the second half of 2026, and noted pricing agreements for HBM3E in 2026 are largely completed, while supply remains tight.
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Arya asked about gross margin sustainability. Murphy stated, “we expect gross margin to improve sequentially versus the second quarter” on tight DRAM supply and durable supply-demand factors.
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Christopher Muse, Cantor Fitzgerald: Asked about sustainability of DRAM demand and seasonality. Mehrotra emphasized broadening AI trends and tight supply, stating, “AI trends are strong, and this is across data centers, across AI-enabled smartphones and AI-enabled PCs.”
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Muse followed up on CapEx allocation. Murphy said majority of fiscal 2026 spend will be for DRAM, including construction and tools for node transitions, with a net CapEx framework of around $18 billion.
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Harlan Sur, JPMorgan: Asked about inventory trends and supply tightness. Murphy said, “We do expect inventories to remain at or better on DIO than we’ve seen in the fourth quarter. DRAM will remain very tight…”
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Sur inquired about HBM4 design and performance. Mehrotra credited Micron’s advanced design and CMOS base die as key to exceeding customer requirements for bandwidth and pin speed.
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Sreekrishnan Sankarnarayanan, TD Cowen: Asked about HBM supply opportunity and flexibility. Mehrotra said Micron has “flexibility to opportunistically manage share here for HBM” and is well positioned for both HBM and non-HBM margins.
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Sankarnarayanan asked about HBM4E customization mix. Mehrotra noted HBM4 uses in-house base die, while HBM4E, coming in 2027, will offer both standard and customized products in partnership with TSMC.
Sentiment Analysis
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Analysts pressed on details of DRAM/NAND revenue breakdown, HBM TAM, and gross margin sustainability, reflecting optimism but also a focus on sustainability and visibility. The tone was slightly positive but probing for more specifics on supply constraints and future mix.
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Management maintained a confident tone throughout, emphasizing strong execution, robust demand, and industry leadership. Direct quotes such as “we feel very good about HBM longer-term opportunities” and “we are very well positioned with these products” reflect high conviction. During Q&A, management continued to provide detailed, positive responses, reinforcing confidence in tight supply and future growth.
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Compared to the previous quarter, both management and analysts expressed higher confidence and less concern regarding supply/demand dynamics, with management notably more assertive in discussing positioning and growth outlook.
Quarter-over-Quarter Comparison
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Guidance for Q1 2026 revenue and gross margin is higher than previous quarter, reflecting increased confidence.
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Strategic focus has shifted to scaling advanced nodes (1-gamma DRAM, G9 NAND) and expanding HBM leadership, whereas prior quarter focused more on market normalization and inventory recovery.
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Analysts’ questions moved from concerns about inventory and pricing normalization to deeper inquiries about capacity, supply flexibility, and the competitive landscape in HBM.
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Key metrics such as gross margin, operating income, and free cash flow all showed strong sequential improvement.
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Management’s tone was more assertive and forward-looking, emphasizing readiness for AI-driven demand and new product ramps.
Risks and Concerns
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Management noted potential impacts from “potential new tariffs” are not included in guidance.
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Supply tightness in DRAM and constraints due to node migration and global capacity expansion timing were highlighted.
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Analysts raised questions about seasonality, supply flexibility, and ability to meet unexpected surges in HBM demand.
Final Takeaway
Micron closed fiscal 2025 with record revenue, gross margin, and EPS, supported by robust AI-driven demand and tight DRAM supply. The company projects a strong start to fiscal 2026 with new revenue and EPS records, continued investments in advanced nodes, and a focus on maintaining leadership in HBM and data center memory. Management emphasized confidence in the sustainability of demand trends and supply discipline, positioning Micron to capitalize on the expanding AI opportunity in memory markets.