MU · Q1 2026 Earnings

Bullish

Micron

Reported December 17, 2025

30-second summary

Micron printed $13.64B in Q1 FY26 revenue (+57% YoY, +21% QoQ), $843M above the guide high end, with GAAP gross margin of 56% — 450bps above the guide high. The Q2 FY26 guide of $18.7B at midpoint implies another ~37% sequential step with non-GAAP gross margin guided to 68% (±100bps), a record and ~7 points above the prior record. Management disclosed they can only meet 50-67% of demand from several key customers, FY26 CapEx is now ~$20B (up from the ~$18B framed last quarter), and multi-year LTAs covering DRAM, NAND, and bundled HBM are being signed into 2027-2028.

Headline numbers

EPS

Q1 FY2026

$4.78

Revenue

Q1 FY2026

$13.64B

+56.8% YoY

Gross margin

Q1 FY2026

56.0%

Free cash flow

Q1 FY2026

$3.91B

Operating margin

Q1 FY2026

45.0%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$13.64B	+56.8%	$11.32B	+20.5%
EPS	$4.78	—	$3.03	+57.8%
Gross margin	56.0%	—	44.7%	+1130bps
Operating margin	45.0%	—	32.3%	+1270bps
Free cash flow	$3.91B	—	—	—

Guidance

Guidance is issued one quarter forward. The Prior-guide column references the guide issued last quarter for the period just reported; the New-guide column is for next quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q1 FY2026	$12.50 billion ± $300 million	$13.643 billion	+$1.143 billion above guide	Beat
Gross Margin (GAAP)	Q1 FY2026	50.5% ± 1.0%	56.0%	+5.5 points above guide	Beat
Gross Margin (Non-GAAP)	Q1 FY2026	51.5% ± 1.0%	56.0%	+4.5 points above guide	Beat
EPS (GAAP)	Q1 FY2026	$3.56 ± $0.15	$4.60	+$1.04 above guide	Beat
EPS (Non-GAAP)	Q1 FY2026	$3.75 ± $0.15	$4.78	+$1.03 above guide	Beat
Operating Expenses (GAAP)	Q1 FY2026	$1.49 billion ± $20 million	Not disclosed	in-line	Met

New guidance

Metric	Period	Guide	YoY
Revenue	Q2 FY2026	$18.70 billion ± $400 million	—
EPS (GAAP)	Q2 FY2026	$8.19 ± $0.20	—
EPS (Non-GAAP)	Q2 FY2026	$8.42 ± $0.20	—
Gross Margin (GAAP)	Q2 FY2026	67.0% ± 1.0%	—
Gross Margin (Non-GAAP)	Q2 FY2026	68.0% ± 1.0%	—
Operating Expenses (GAAP)	Q2 FY2026	$1.56	—

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
Cloud Memory Business Unit	$5.284B	+99.7%
Mobile and Client Business Unit	$4.255B	+63.1%
Core Data Center Business Unit	$2.379B	+3.8%
Automotive and Embedded Business Unit	$1.72B	+48.6%

Profitability

Q1 FY2026

Segment	Q1 FY2026
Cloud Memory Gross Margin	66%
Cloud Memory Operating Margin	55%
Mobile and Client Gross Margin	54%
Mobile and Client Operating Margin	47%
Core Data Center Gross Margin	51%
Automotive and Embedded Gross Margin	45%
Operating Cash Flow	$8.411 billion
Adjusted Free Cash Flow Margin	28.6%

Management tone

Narrative arc: Q3 HBM scaling faster than planned → Q4 Cloud memory at scale, building for the next leg → Q1 Supply-constrained pricing power with multi-year customer lock-in.

Three quarters ago management framed HBM as a roadmap pitch with pull-forward optionality on share parity. Last quarter the language tightened to "locked-in volumes and pricing" for CY26 HBM, but the contracts themselves were not disclosed. This quarter Sanjay confirmed to UBS that "multi-year contracts with multiple key customers" are being signed with "specific commitments and stronger structures than prior LTAs," covering DRAM, NAND, and bundled products — a structural departure from Micron's historical one-year contract cadence. The shift signals management has converted the cyclical strength into contractual revenue visibility extending into 2027-2028, and is no longer dependent on spot pricing to hold the margin profile.

The supply-demand framing has hardened to an unprecedented disclosure. In Q4 management framed Idaho as the long-dated supply answer for H2 2027 production. This quarter Sanjay acknowledged in Q&A with CJ Muse that Micron "can only meet 50-67% of demand from several key customers" — a quantification of the supply gap that no prior call has provided. CapEx is now ~$20B for FY26 (up from the ~$18B framed last quarter), brick-and-mortar construction CapEx is doubling 2025-2026, Idaho 1's first wafer output has been pulled into mid-CY27, and FY27 CapEx is guided up YoY. The signal: management is now spending against a multi-year supply deficit, not a cyclical recovery.

Margin commentary moved from "structural sustainability" (Q4) to "mathematical saturation" (this quarter). Mark told Krish Sankar at TD Cowen that margins will expand through FY26 but at "more gradual" pace because high absolute levels limit percentage expansion mathematically. This is the first time in three quarters management has front-loaded a margin-deceleration narrative — but importantly, the deceleration is presented as a pace issue, not a level issue. The 68% Q2 guide is the floor of the conversation, not the ceiling.

HBM disclosure posture remained the one area where management held back. Tom O'Malley at Barclays pressed directly for HBM as a percentage of DRAM revenue and got nothing. Krish Sankar pressed for HBM share targets against the $100B 2028 TAM (which management pulled forward by two years this quarter) and got portfolio-mix talking points instead. The refusal to quantify HBM revenue while disclosing competitive specs (HBM4 at >11 Gbps, 30% lower power than competitors) suggests the gating factor is customer-contract confidentiality, not weakness.

Recurring themes management leaned on this quarter:

Earnings call initiationFinancial performance review Q1 2026

Q&A highlights

Timothy Akiri · UBS

Asked about multi-year long-term agreements (LTAs) with customers, including bundling of DDR5 with HBM and NAND, contract terms, and duration through 2026-2028.

Sanjay confirmed multi-year contracts with key customers involving DRAM and NAND with specific commitments and stronger contract structures than prior agreements, but declined to provide specific terms or pricing details.

Multi-year contracts with multiple key customers in discussionContracts include specific commitments and stronger structures than prior LTAsDifferent from previous one-year contractsInclude DRAM, NAND, and bundled products

CJ Muse · Kanta Fitzgerald

Asked about CapEx philosophy, whether Micron is being too conservative with clean room capacity additions given tight supply environment, and how supply-constrained growth will develop.

Mark and Sanjay explained that clean room build-out takes time, node transitions (One Gamma, G9) are the near-term supply drivers, and Micron is accelerating equipment pulls and construction timelines. Acknowledged inability to meet ~50-67% of demand from key customers but emphasized disciplined approach.

Micron can only meet 50-67% of demand from several key customersDoubling brick-and-mortar construction CapEx from 2025 to 2026Idaho 1 first wafer output pulled in to mid-calendar 2027FY2026 CapEx guidance: ~$20 billion

Harlan Sur · JP Morgan

Asked about incremental HBM3E demand from new ASIC/XPU programs (Google TPU, AWS Trinium), how Micron will manage HBM3E vs HBM4 mix in 2026 given increased upside, and whether enterprise SSD demand is tied to inferencing vs training workloads.

Sanjay confirmed 2026 will have mix of HBM3E and HBM4, with supply remaining tight for both. Micron is managing product mix based on customer requirements and profitability. Confirmed multi-year contracts include SSDs. Noted AI evolution from training to inferencing drives SSD demand growth.

2026 will have strong year-over-year HBM growth with mix of HBM3E and HBM4HBM supply will be tight in 2026Multi-year contracts include data center SSDsEnterprise SSD growth driven by inference workloads and generative AI video applications

Tom O'Malley · Barclays

Asked for HBM as percentage of DRAM business, competitive positioning vs new competitor HBM3E certifications, and specific HBM revenue contribution in Q1 and Q2 guidance.

Sanjay declined to provide specific HBM revenue percentages but emphasized competitive strength with HBM4 (11+ Gbps, 30% lower power than competitors), strong HBM3E ramp achievement, and focus on managing HBM/non-HBM mix strategically rather than maximizing HBM revenue.

HBM4 specifications: >11 Gbps performance (industry-leading), 30% lower power than competitorsReached HBM share in line with overall DRAM share in SQ3Managing HBM/non-HBM mix based on customer relationships and profitabilityHBM TAM expected to reach $100 billion by 2028 (2 years ahead of prior outlook)

Chris Sankoff · TD Cowan

Asked about gross margin trajectory beyond Q2 guidance and assumptions about HBM market share vs total DRAM share in the context of 40% CAGR and $100B TAM by 2028.

Mark stated margins are not guided beyond Q2 but indicated margins will expand through the year with more gradual growth at high levels due to mathematical saturation. Sanjay declined to specify HBM market share targets, emphasizing portfolio mix management based on strategic objectives.

Q2 gross margin guidance: 68% +/- 100 bps (record, up 7 pts from prior record)Expected margin expansion through FY2026 at more gradual pace than recent quartersHigh gross margin levels limit percentage expansion mathematicallyHBM market share not being specified; mix managed strategically

Answers to last quarter's watch list

Q1 FY26 GAAP GM at/above 50.5% and Q2 guide above 52% — Q1 GAAP gross margin came in at 56.0%, 550bps above the guide midpoint. Q2 FY26 GAAP gross margin guided to 67.0% (non-GAAP 68.0%) — not just above 52% but ~7 points above the prior record.

Resolved positively

Core Data Center -23% YoY: reclassification or weakness? — Core Data Center revenue printed +4% YoY in Q1, stabilizing from the prior quarter's decline. Combined with Cloud Memory doubling YoY to $5.28B, this confirms the prior softness was reclassification (HBM/cloud SSDs migrating to Cloud Memory) rather than end-market deterioration.

Resolved positively

HBM4 ramp cadence and product-line margin disclosure — Management disclosed HBM4 specs (>11 Gbps, 30% lower power than competitors) and confirmed 2026 will have HBM3E/HBM4 mix with both tight, but continued to refuse product-line margin disclosure when pressed by Barclays and TD Cowen. The disclosure posture has not changed.

Continue monitoring

Quantified CY26 HBM supply commitments — Management confirmed multi-year LTAs covering DRAM, NAND, and bundled products with multiple key customers, with stronger structural commitments than prior one-year contracts. Did not provide a percentage-booked figure or dollar commitment, but the contractual framework upgrade is the substantive answer.

Resolved positively

FY26 CapEx allocation detail — FY26 CapEx now ~$20B (up from ~$18B framed last quarter), with brick-and-mortar construction CapEx doubling from 2025 to 2026 and Idaho 1 first wafer pulled into mid-CY27. FY27 CapEx guided up YoY. The DRAM/HBM/Idaho split was not granularly broken out. Status: Resolved positively on direction, Continue monitoring on granularity.

DDR4/LP4 extension dynamics — Not directly addressed in available Q&A this quarter.

Continue monitoring

What to watch into next quarter

Whether Q2 FY26 non-GAAP gross margin lands at or above the 68% guide midpoint, and whether management guides Q3 above 70% or signals the "mathematical saturation" deceleration begins. A flat Q3 guide vs Q2 actual would be the first signal the cycle peak is being framed.

Whether the supply-gap disclosure (50-67% of customer demand being met) is repeated, quantified more precisely, or walked back. If supply gap persists at this magnitude through CY26, pricing power has further to run; if it narrows, the multi-year LTA pricing is now the floor.

HBM revenue disclosure posture — management refused to quantify HBM as a % of DRAM under direct pressure from two analysts. A change in disclosure (either direction) would be a material signal on how management views the HBM cycle's durability vs. competitor entry.

Multi-year LTA contract specifics — duration, dollar commitment, or pricing structure. The framework has been confirmed; the next disclosure threshold is at least one quantitative parameter.

FY26 CapEx mix between Idaho construction, equipment for current fabs, and HBM-specific tooling. The $20B headline is up from $18B in one quarter — watch whether the next move is to $22B+ and whether any of the construction spend is now producing wafers in FY26 vs. the prior H2 CY27 framing.

Whether new ASIC/TPU programs (Google, AWS Trinium) translate into named HBM3E share gains or remain in the generic "key customers" frame.

Sources

Micron Technology, Inc. Fiscal Q1 2026 Press Release (Form 8-K Exhibit 99.1), filed December 17, 2025. https://www.sec.gov/Archives/edgar/data/723125/000072312525000044/a2026q1ex991-pressrelease.htm
Micron Technology Fiscal Q1 2026 earnings call Q&A (analyst exchanges as transcribed).

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