Micron crushes earnings as AI memory demand turns into a $22 billion backlog

Micron Technology (NASDAQ: MU) turned AI memory demand into a monster fiscal third quarter, with revenue of $41.46 billion and adjusted earnings of $25.11 per share. That was far above the $35.84 billion in revenue and $20.78 in adjusted EPS expected by analysts tracked by London Stock Exchange Group (LSE: LSEG). The stock jumped 15% after hours.

The company’s sales were nowhere near this level a year ago. Micron made $9.30 billion in the same quarter last year and $23.86 billion in the prior quarter.

Micron turns AI chip demand into higher sales, cash flow, and margins

Micron reported GAAP net income of $28.24 billion, equal to $24.67 per diluted share. Adjusted net income was $28.86 billion, or $25.11 per diluted share.

Those numbers were far above last year’s fiscal third quarter, when GAAP profit was $1.89 billion and adjusted profit was $2.18 billion.

Micron’s operating cash flow reached $25.39 billion, compared with $11.90 billion in fiscal Q2 and $4.61 billion a year earlier.

Margins were the loudest part of the report. GAAP gross margin came in at $35.06 billion, or 84.6% of revenue. That was up from 74.4% in the prior quarter and 37.7% last year. Adjusted gross margin was $35.20 billion, or 84.9%, compared with 74.9% in fiscal Q2 and 39.0% in fiscal Q3 2025.

Micron’s GAAP operating expenses were $1.74 billion, while adjusted operating expenses were $1.52 billion. GAAP operating income reached $33.32 billion, or 80.4% of revenue. Adjusted operating income came in at $33.68 billion, or 81.2% of revenue.

The business units all moved in the same direction, but the AI-heavy areas carried serious weight. Cloud Memory brought in $13.77 billion in revenue, with 83% gross margin and 78% operating margin. That compared with $7.75 billion in fiscal Q2 and $3.39 billion last year.

Micron’s core data center sales revenue was at $11.52 billion, compared to $5.69 billion in the prior quarter and $1.53 billion in the same quarter a year earlier. Micron’s gross margin was 87%, while its operating margin was 83%.

Sales revenue of Micron’s mobile and client business was at $11.52 billion, with a gross margin of 87% and operating margin of 86%, compared to $7.71 billion and $3.26 billion in the previous quarters of fiscal years respectively.

Micron’s automotive and embedded business had sales of $4.63 billion, with a gross margin of 79% and operating margin of 75%, compared to $2.71 billion and $1.13 billion respectively.

Micron locks customer orders and gives Wall Street a bigger fourth-quarter target

Chief Executive Officer Sanjay Mehrotra tied the quarter directly to AI demand. “Micron’s record fiscal Q3 financial results and even stronger outlook for Q4 reflect the strategic value of memory in the AI era,” Sanjay said. He also said the company is spending at record levels on technology, products, and supply to meet customer demand.

The bigger piece is the customer lock-in. Micron said it has signed 16 long-term agreements with buyers, including data center operators and automakers. The deals cover three to five years and include binding purchase volumes. Sanjay said that once the agreements are fully in place, “approximately half or more” of company revenue should sit under those strategic customer agreements.

Chief Financial Officer Mark Murphy told analysts the contracts help the company plan spending with more certainty. “This is good for Micron,” Mark said. “We get visibility on our demand, it’s committed volume that we can be confident about making our investments.”

For the fiscal fourth-quarter, Micron expects revenue of $50.0 billion, plus or minus $1.0 billion, under both GAAP and non-GAAP measures. It guided for gross margin of about 86%. GAAP operating expenses are expected to be around $1.86 billion, while adjusted operating expenses are expected to be near $1.65 billion.

Earnings guidance also came in heavy. Micron expects GAAP diluted EPS of $30.73, plus or minus $1.00. Adjusted diluted EPS is expected at $31.00, with the same range. The board also declared a $0.15 per-share quarterly dividend on June 24, payable in cash on July 21, 2026, to shareholders recorded by the close of business on July 6, 2026.

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