Micron Q3 FY2026 earnings beat estimates driven by strong HBM (High Bandwidth Memory) demand from AI workloads
Micron Technology reported third-quarter fiscal 2026 non-GAAP earnings of $25.11 per share, beating the Zacks Consensus Estimate by 17.39% compared to $1.91 per share in the year-ago quarter. Revenues soared 345.7% year over year to $41.46 billion, surpassing consensus by 12.91%, with a sequential jump of 73.7%. The strong performance was driven by robust AI-led memory demand, with data center revenues exceeding $25 billion—an annualized run rate of more than $100 billion.
The company announced 16 strategic customer agreements (SCAs) across data center, consumer, and auto markets, representing roughly 20% of DRAM volume and one-third of NAND volume over the covered period. Micron expects approximately half or more of its revenues to eventually be under SCAs. These agreements have generated $22 billion in cash deposits and related financial commitments, supporting longer-term supply visibility and financial predictability.
Top-line growth benefited from tight DRAM and NAND supply, stronger pricing, and accelerating AI infrastructure demand. Industry demand for both DRAM and NAND continues to significantly exceed supply. DRAM revenues reached $31.3 billion—76% of total revenues—increasing 67% sequentially, driven by low-single-digit bit shipment growth and low-60s percentage ASP increases. NAND revenues totaled $9.9 billion, representing 24% of total revenues, with a 99% sequential increase from mid-single-digit bit shipment growth and mid-80s percentage ASP gains.
The Cloud Memory Business Unit achieved record revenues of $13.77 billion, up 77.7% sequentially and 306.6% year over year. Core Data Center Business Unit revenues hit a record $11.52 billion, up 103% sequentially and 653.2% year over year. Mobile and Client Business Unit revenues reached a record $11.52 billion, up 49.4% sequentially and 254% year over year, driven by higher pricing. Automotive and Embedded Business Unit revenues climbed to a record $4.63 billion, up 71.1% sequentially and 311.2% year over year, reflecting higher pricing and bit shipments.
Non-GAAP gross margin expanded to 84.9% from 74.9% in the prior quarter and 39% year ago. Cloud Memory gross margin reached 83% from 74% sequentially and 58% year over year. Core Data Center gross margin improved to 87% from 74% sequentially and 38% year over year. Mobile and Client gross margin reached 87% versus 79% sequentially and 24% year over year. Automotive and Embedded gross margin surged to 79% from 68% sequentially and 26% year over year.
Non-GAAP operating expenses were $1.52 billion, up 6.8% year over year and 34% sequentially. Non-GAAP operating income reached $33.68 billion compared to $2.49 billion year ago and $16.46 billion in the prior quarter.
Micron exited the quarter with $30.2 billion in cash, marketable investments, and restricted cash, with total liquidity of $32.2 billion. The company generated $25.39 billion in operating cash flow, with capital expenditures net of government incentives totaling $7.1 billion, resulting in adjusted free cash flow of $18.3 billion. Micron declared a quarterly dividend of 15 cents per share, payable July 21, 2026, to shareholders of record as of July 6, and did not repurchase shares during the quarter.
For the fourth quarter of fiscal 2026, Micron expects revenues of $50 billion, plus or minus $1 billion, with a non-GAAP gross margin of approximately 86%. Non-GAAP operating expenses are projected at approximately $1.65 billion, with adjusted earnings of $31 per share, plus or minus $1, based on roughly 1.15 billion diluted shares.
Micron now expects supply-demand conditions for both DRAM and NAND to remain tight beyond calendar 2027. In DRAM, the company expects industry bit shipments in calendar 2026 to grow in the low to mid-20s percentage range, slightly above prior guidance. In NAND, Micron expects industry bit shipments in calendar 2026 to grow approximately 20%, unchanged from prior expectations.