Micron Smashed Even the Bulls: Evercore Says This AI Rally Has the ‘Earnings Power’ to Last

The post Micron Smashed Even the Bulls: Evercore Says This AI Rally Has the ‘Earnings Power’ to Last appeared first on 24/7 Wall St..

Memory stocks rarely produce 84% gross margins. Commodity DRAM is the business school case study for cyclical pain, where pricing power goes to die. So when Micron Technology (NASDAQ:MU) posted non-GAAP gross margins of 84.9% for its fiscal third quarter, the number stopped being a memory number and became a question about what kind of company Micron has become.

Julian Emanuel, Evercore ISI’s chief equity and quantitative strategist, addressed that question on CNBC’s Closing Bell Overtime on June 24, 2026. The earnings report was a bull-case beat, in his framing, which matters. Sell-side consensus is one thing. The hedge fund whisper number, already baked with AI optimism, is harder to clear. Micron cleared it convincingly, and the reaction across the semiconductor complex suggested the print reset expectations for the entire memory tape.

What the numbers actually said

Adjusted EPS landed at $25.11 against a $20.78 consensus. Revenue hit $41.456 billion, beating the Street by 17.6% and growing 345.72% year over year, a comp profile that signals a business changing shape. GAAP gross margin expanded to 84.6% from 37.7% a year ago. That margin move is the whole story.

Q4 guidance followed. Management called for $50 billion in revenue, hugging the high end of buy-side modeling, with non-GAAP EPS of $31.00 ± $1.00 and ~86% gross margins. Capex of $7.1 billion versus the $7.3 billion estimate was the only soft data point, a mild underspend some analysts will read as supply discipline and others as a tell on capacity. The official press release sits on the SEC’s EDGAR system.

The market reaction matched the surprise. Micron closed +12.68% on earnings day, the strongest post-earnings move in eight quarters, against a stock already up 267.54% year to date through the prior close.

Why Emanuel called it durable

CEO Sanjay Mehrotra anchored the durability argument himself, saying multi-year Strategic Customer Agreements “will significantly enhance the durability and predictability of Micron’s strong financial performance.”. The HBM4 stack going into the lead AI accelerator customer platform is now sold forward on contracts that look more like aerospace backlog than spot-market DRAM. That is why Emanuel argued the current cycle has, in his words, real earnings power behind it, unlike the late-1990s tech boom.

The lead customer is widely understood to be NVIDIA (NASDAQ:NVDA), whose Blackwell and Rubin platforms consume HBM in volumes that would have sounded absurd two years ago. Moreover, Jensen Huang has called this “the largest infrastructure expansion in human history.” NVIDIA’s own Q1 FY27 data center revenue of $75.25 billion backs the framing. Meanwhile, Advanced Micro Devices (NASDAQ:AMD) has worked its way into the conversation with the MI450 series and a Meta partnership for up to 6 GW of Instinct GPUs, with shares up 142.69% year to date. The takeaway for portfolio managers: HBM supply is now a strategic asset, and Micron sits at the center of a customer list that includes both of the most-watched accelerator franchises in the market.

The hedge Emanuel actually wants you to consider

Where the segment got more interesting was Emanuel’s portfolio construction point. Investor flows are tilting toward AI “recipients” like Micron over the hyperscalers “footing the bill.”. That is a polite way of saying the people writing the capex checks may not get the same return on capital as the suppliers selling them irreplaceable parts. The math is straightforward: when one input commands 84% gross margins and customers sign multi-year take-or-pay style agreements, the rent flows to the supplier.

To manage concentration risk in an AI-heavy book, Emanuel pointed to over 80 negative-beta stocks that have moved inversely to the S&P 500 yet kept pace over the past six months. He flagged two near-term volatility drivers worth keeping in mind, supply jitters and uncertainty around the Fed chair transition.

For now, the Micron earnings report validates the thesis that the AI capex wave is showing up in supplier income statements rather than just slide decks. Micron trades at a forward PE of 9, which is either a screaming bargain or a market quietly pricing in the next memory downcycle. Q4 guidance and how those Strategic Customer Agreements flow through next year’s revenue line will settle that argument. For now, Evercore’s framing is the one investors are anchoring to as they reposition into the second half.

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