Micron Stock Jumps as Record Margins Set the Stage for Earnings

Micron Technology closed at $1,015.80 on Friday, September 18, up roughly 9.63% over two sessions, as the market looked ahead to a September 30 earnings report that follows the most profitable quarter in the company's history. In fiscal Q3, Micron's gross margin hit 84.9%, a company record that surpassed the 61.0% peak of the prior 2018 cycle by 24 points and, according to CNBC's comparison of megacap tech margins, moved ahead of Nvidia's 75% and Broadcom's 69.5%, landing just behind Meta's roughly 82%. Micron has now guided to an even higher 86% for the quarter it is about to report. The question heading into the print is whether a memory company, whose margins collapsed to single digits and even negative territory as recently as 2023, can hold a figure that would embarrass most of Silicon Valley's software businesses. This piece walks through how Micron's margins got here, what record profitability means for Tuesday's report, where the chart stands, and how bulls and bears read a company sitting on a margin peak with a known history of falling from one.

 

 

 

Micron's fiscal third-quarter report on June 24 was, in the company's own words, a record on nearly every line. Revenue reached $41.456 billion, up 74% sequentially and 346% year over year. Gross profit was $35.199 billion on a non-GAAP basis, or 84.9% of revenue, up from 74.9% in fiscal Q2 and just 39.0% a year earlier. CFO Mark Murphy told analysts on the call that the fiscal Q3 gross margin more than doubled from a year ago and was a new company record, and CEO Sanjay Mehrotra said Micron's record results and even stronger fiscal Q4 outlook reflect the strategic value of memory in the AI era. Operating cash flow reached $25.39 billion, up from $11.90 billion the prior quarter and $4.61 billion a year earlier.

The margin expansion followed a clear staircase. Fiscal Q2 2026 revenue of $23.9 billion represented a fourth consecutive quarterly record, with gross margin at 74.9%, and management had guided fiscal Q3 to around 81% before the actual 84.9% print beat that guidance by nearly four points. Mehrotra told analysts around that time that Micron could fulfill only 50% to two-thirds of customer demand in the medium term, a structural supply deficit that keeps amplifying pricing power. For fiscal Q4, Micron guided revenue to $50.0 billion, plus or minus $1.0 billion, gross margin to approximately 86%, and non-GAAP earnings per share to $31.00, plus or minus $1.00, a guide that itself calls for a further margin improvement rather than a plateau. The 16 strategic customer agreements signed this year, worth roughly $100 billion in minimum contracted revenue, are structured with floor prices that management says support durable, though not necessarily ever-rising, margins.

 

Thursday's gain came after Intel CEO Lip-Bu Tan told the AI Infrastructure Summit in Santa Clara that memory prices have climbed between five and seven times and that the shortage could worsen into 2027, a comment that reinforced the scarcity behind Micron's margin story. The stock rose 5.50% to $977.50. Friday added another 3.92% to $1,015.80 after RBC Capital Markets raised its calendar third-quarter DRAM contract price forecast to more than 20% quarter over quarter from about 10% previously, with analyst Srini Pajjuri projecting an 86.7% gross margin for the report, roughly 100 basis points above his prior estimate and just above Micron's own 86% guide.

What makes this rally different from an ordinary pre-earnings run-up is what it implies about durability. Micron's stock did not fall when gross margin numbers this high were first reported in June, because the market had time to process the strategic customer agreements and their floor pricing. What it is testing now, into September 30, is whether Micron can guide fiscal Q1 2027 margins to stay near or above 86% rather than mark the June and August quarters as the top. RBC's Pajjuri has said he expects blended DRAM pricing to rise another 5% to 10% in fiscal Q1, which would argue for margins holding rather than mean-reverting immediately. The market's reaction over the past two sessions suggests investors are leaning toward believing that case.

 

 

 

Micron's stock jumped 13.1% in after-hours trading to $1,185.90 on the night of the June 24 report, approaching its then 52-week high of $1,213.56, before the shares went on to set a record intraday high of $1,255.00 and a record close of $1,213.37 the following day. The stock has since given back about 19% of that peak even though the fundamental margin story has, if anything, strengthened, since Micron's own guidance now calls for margins above where they were when the stock hit its high.

The trend structure remains constructive. On September 14, Micron traded 48.1% above its 200-day simple moving average of $622.07, and Friday's $1,015.80 close sits above the 50-day simple moving average near $927.28. The 14-day RSI was around 47 just before Friday's advance, a neutral reading well below overbought territory, leaving room for the stock to run further if the September 30 report extends the margin trend. Resistance sits at $1,036.13, the ceiling of the August bounce, with support at Thursday's $977.50 breakout close, the 50-day average near $927.28, and deeper support between $770.10 and $737.88 from the July low. Options markets imply an 11% move after the report, above Micron's four-quarter average absolute move of 8.14%.

 

The bull case treats 84.9% as evidence of a structural shift rather than a cyclical spike. Micron's margin now exceeds Nvidia's 75% peak margin from early 2024 and sits ahead of Broadcom's 69.5% and Microsoft's 67.6%, an unusual position for a company that sells a physical, historically commoditized product. The 16 strategic customer agreements, with floor prices and multi-year terms covering about 20% of DRAM volume and a third of NAND volume when fully executed, are designed specifically to prevent the kind of margin collapse that hit Micron in 2023, when memory oversupply pushed gross margin briefly negative. Analysts such as RBC's Pajjuri argue that with the industry expected to remain in an allocation environment beyond 2027 and Micron's own commentary suggesting the market stays tight into that period, the current margin level is closer to a new baseline than a peak to be feared.

The bear case rests on a simple historical fact: Micron has been the margin king before, and it did not last. The 2018 cycle topped out at 61.0% gross margin in fiscal Q4 of that year, and within roughly five years margins had fallen into the high teens, with GAAP gross margin as low as 17% to 19% in fiscal 2024 and negative in stretches of fiscal 2023, according to Micron's own SEC filings. Memory pricing has always been cyclical because capacity additions eventually catch up with demand, and TrendForce and other trackers have already flagged that the pace of sequential DRAM price increases is slowing, from 90% to 95% in one recent quarter to an estimated 58% to 63% in the next and a projected 20% or so after that. Even bulls acknowledge that Micron is investing at record levels to expand supply, which is itself the mechanism that historically ends memory upcycles. If China's CXMT succeeds in ramping DRAM and NAND output faster than expected, or if AI infrastructure spending decelerates, the same operating leverage that pushed margins to a record on the way up could reverse it quickly on the way down.

 

The September 30 report is less a test of revenue, where Micron has already guided to $50 billion and analysts expect $50.42 billion, than a test of the margin trajectory. A print that holds gross margin at or above the 86% guide, paired with fiscal Q1 2027 guidance that does not show sequential deterioration, would support the case that Micron has permanently repriced. A beat on revenue accompanied by margin guidance that steps down meaningfully, even if still historically high, could trigger a sell-the-news reaction given the stock's run into the print and an implied options move of about 11%.

Macro conditions add a layer of risk that is separate from Micron's own execution. The Federal Reserve raised rates on September 16 and signaled more increases, the 10-year Treasury yield touched roughly 5% this week, and a September 14 selloff driven by AI-slowdown commentary from prominent industry executives showed how quickly sentiment can turn against memory and AI-adjacent names. Traders can use $977.50 and the 50-day average near $927.28 as reference levels before the report, while those looking for confirmation that the margin story is intact may prefer to wait for a sustained close above $1,036.13.

 

Micron's climb from a 2018 peak of 61% gross margin, through years of single-digit and negative margins, to a fresh record of 84.9% is one of the more dramatic turnarounds in large-cap tech, and the stock's two-session rally into September 30 reflects a market betting that guidance of 86% is achievable rather than the top of another cycle. History says memory margins eventually fall, and it says so loudly. The strategic customer agreements are Micron's answer to that history, but they have not yet been tested by a full downturn. With $977.50 as the level to watch on the downside and $1,036.13 the ceiling on the upside, will Tuesday's report show that Micron's margins are settling into a new, durable range, or is this the same story investors have seen before, just with a higher starting point?

 

A: Micron's non-GAAP gross margin reached a company record of 84.9% in fiscal Q3 2026, up from 74.9% the prior quarter and 39.0% a year earlier. According to a CNBC comparison published after the report, that put Micron ahead of Nvidia's 75% peak margin, Broadcom's 69.5%, and Microsoft's 67.6%, and just behind Meta's roughly 82%.

A: No. The prior cycle's peak was 61.0% gross margin in fiscal Q4 2018. Margins later fell sharply, reaching as low as 17% to 19% on a GAAP basis in fiscal 2024 and turning negative in parts of fiscal 2023, according to Micron's SEC filings.

A: Micron guided fiscal Q4 revenue to $50.0 billion, plus or minus $1.0 billion, non-GAAP gross margin to about 86%, and non-GAAP earnings per share to $31.00, plus or minus $1.00. Wall Street consensus for the report is roughly $50.42 billion in revenue and $31.14 in adjusted earnings per share.

A: Micron rose 5.50% to $977.50 on September 17 after Intel's CEO said memory prices have climbed between five and seven times and warned the shortage could worsen. It then gained 3.92% to $1,015.80 on September 18 after RBC Capital Markets raised its DRAM pricing forecast and projected an 86.7% gross margin for the upcoming report.

A: Historically, memory margins fall when new supply catches up with demand, which is what happened after the 2018 peak. Risks flagged by analysts include slowing sequential DRAM price growth, expansion from China's CXMT, new capacity from Micron itself and its competitors, and any slowdown in AI infrastructure spending that reduces memory demand.