Super invincible spiral big bang, Micron's financial report reignites the long bull in the semiconductor sector

Early in the morning on June 25th, Beijing time, the highly anticipated financial report of Micron for Q3 of fiscal year 2026 was officially released.

Before the release of this quarter's financial report, Micron was in a somewhat awkward situation. On the one hand, everyone knew that it would present an excellent report card. On the other hand, everyone also knew that the market had already factored in this "excellence" into the stock price in advance.

In the past few weeks, market participants from all walks of life have been almost engaged in a game around the same question - for a storage giant that has already stood at the center of the AI wave, how strong does the performance need to be to continue driving up its own stock price and injecting confidence into the already extremely crazy semiconductor bull market?

The answer is - even more exaggerated than everyone expected!

The market has been aggressive enough, but still conservative

The Q3 financial report released this morning shows that Micron's revenue in the third quarter reached $41.456 billion (the market generally expected the revenue to be about $35.4 billion), a year-on-year surge of 346%; the GAAP net profit was $28.243 billion, a year-on-year surge of nearly 15 times; the adjusted earnings per share was $25.11.

What's even more exaggerated is the guidance for the next quarter. Micron expects its Q4 revenue to reach $50 billion (plus or minus $1 billion), far exceeding the market's previous expectation of about $42.9 billion and Goldman Sachs' aggressive expectation of $48.8 billion (generally regarded as the most optimistic scenario); the gross profit margin in the fourth quarter is expected to be about 86%, and the earnings per share are expected to reach about $31.

This is why many investors let out the same exclamation right after the release of the financial report. Such a financial report is truly super invincible and sky - rocketing!

From HBM to SSD, the entire storage stack is running at full speed

If we want to find a core driving force for this round of growth, the answer, of course, is still AI. But compared with the HBM that the market has been discussing repeatedly in the past year, the more noteworthy point in this financial report is that the influence of AI has begun to spread to the entire storage industry chain.

From the perspective of the business structure, almost all of Micron's core businesses are growing simultaneously, among which:

The revenue of the cloud memory business reached $13.77 billion, a year - on - year increase of more than 300%;

The revenue of the core data center business reached $11.52 billion, a year - on - year increase of more than 600%;

The revenue of data center SSDs exceeded $5 billion;

The mobile and client business increased by more than 250% year - on - year;

The automotive and embedded business also achieved a growth of more than 300%;

The gross profit margins of each business line generally remained at around 80% or even higher.

This means that this round of AI wave has brought not only the prosperity of a single product, but the overall benefit of the entire storage industry chain.

On the one hand, HBM is still the most direct beneficiary. Micron said that HBM4 has been shipped in bulk to core customers, and samples have been sent to multiple end - customers; HBM4E is progressing as planned and is expected to enter mass production in 2027. At the same time, the company reiterated that all of its HBM production capacity in 2026 has been sold out.

On the other hand, the continuous expansion of AI training and inference demand is also driving up the demand for high - end DRAM, enterprise - level SSDs, and NAND products. As more and more advanced production capacity is preferentially allocated to HBM, the supply in the traditional DRAM and NAND markets has tightened further, thus pushing the entire storage market into the strongest pricing cycle in recent years.

This is why Micron is still extremely optimistic about the industry's prospects. The management expects that the supply - demand tightness in the DRAM and NAND markets will continue beyond 2027. In other words, in Micron's view, the current industry is not approaching the top of the cycle, but more like the early stage of the AI infrastructure construction cycle.

Long - term contracts have been locked in until 2030 at the farthest

If we only understand this financial report as a victory for HBM, we may still underestimate its real significance. Because compared with the revenue guidance of $50 billion, the most noteworthy thing in this financial report is actually another set of figures - $100 billion.

At the earnings conference call, Micron disclosed that as of now, the company has signed 16 long - term strategic customer agreements (SCA), covering data center, consumer electronics, and automotive customers. Most of these agreements have a term of up to 5 years, and some automotive customer agreements have a term of 3 years, with the coverage extending as far as the end of 2030.

These agreements have covered about 20% of DRAM shipments and about one - third of NAND shipments. As more agreements are finalized, more than half of the future revenue is expected to be included in the long - term agreement framework.

It should be specially emphasized that these agreements are not traditional supply agreements. The management confirmed that the relevant agreements adopt a strongly binding Take - or - Pay model. Even if customers do not fully take delivery in the future, they still need to assume the established procurement obligations. Some leading agreements even have a price ceiling and floor mechanism. The price ceiling is anchored to the market price in the second quarter of fiscal year 2026, and even if the price floor in the agreement is implemented, the corresponding gross profit margin is still far higher than the historical cycle high of Micron.

According to the data disclosed by Micron's management, currently, 14 agreements correspond to a guaranteed income of about $100 billion; at the same time, customers will also provide a total of about $22 billion in performance bonds, of which about $18 billion is in cash form and can be directly used to support future production capacity construction and R & D investment.

For the storage industry, this is almost a historic change. In the past few decades, the operating logic of the industry has always been "expand production first, then wait for demand to be digested"; now, Micron is gradually shifting to another model - lock in orders first, then expand production capacity.

This is also what excites the capital market the most. Because it means that Micron's current profitability is no longer just based on the expectation of the boom cycle, but is supported by long - term contracts.

Expand production, expand production, and expand production again. Micron will invest $10 billion in Q4

If the long - term contracts answer the question of "where the demand comes from", then the capital expenditure answers another question - how does Micron plan to meet these demands?

The financial report shows that Micron expects the capital expenditure in the fourth fiscal quarter to reach about $10 billion (higher than Wall Street's previous expectation of about $8.9 billion), and the total capital expenditure for fiscal year 2026 is expected to be about $27 billion. The capital expenditure in each quarter of fiscal year 2027 will be higher than that in the fourth fiscal quarter of 2026. The new investment will be mainly used for the construction of HBM, advanced DRAM, and advanced packaging production capacity.

In the past, such capital expenditure figures might have caused market concerns. After all, for the storage industry, "large - scale production expansion" has never been an unfamiliar term. Historically, whether it was Samsung, SK Hynix, or Micron itself, they have all increased investment at the peak of the industry boom, ultimately leading to oversupply, price collapse, and ending the previous bull market by themselves.

But this time, the situation seems to be changing. The reason is simple - these new production capacities are not based on optimistic predictions of future demand, but on the long - term orders that have already been signed.

On the one hand, there is a guaranteed income of $100 billion, a performance bond of $22 billion, and long - term agreements covering until 2030; on the other hand, there is the continuous expansion of HBM, advanced DRAM, and advanced packaging production capacity. Comparing these data, the current production expansion behavior is more like fulfilling the locked - in orders, rather than the traditional cycle - gambling production expansion based on demand prediction.

Micron's financial report reignites the semiconductor bull market

Before the release of Micron's financial report this quarter, the market sentiment around this round of semiconductor bull market had actually shown a slight sign of wavering.

Earlier this week, the South Korean semiconductor sector just experienced an obvious correction, and leading companies such as SK Hynix and Samsung Electronics were under pressure collectively. Some investors began to worry that after more than a year of crazy growth, whether the AI trading had become too crowded.

And Micron gave a rather direct answer - it's not that the demand has reached its peak, but that the market still underestimates the demand.

From the Q3 performance far exceeding expectations and the Q4 revenue guidance of up to $50 billion; from the sold - out HBM production capacity to the long - term strategic agreements covering until 2030, all are sending the same signal - the AI infrastructure construction is still accelerating, not decelerating.

After the release of the financial report, Micron's stock price soared 16% after hours, driving up the stock prices of semiconductor companies in the US stock market such as Intel, ASML, Marvell, and Qualcomm collectively; the stock markets in South Korea and Japan also opened and closed higher today. The South Korean stock market experienced a circuit - breaker again, and both Samsung and Hynix rebounded significantly; after the opening of the A - share market, the semiconductor industry chain also strengthened, with the memory and advanced packaging sectors leading the rise.

In a sense, this is no longer just a financial report belonging to Micron, but another reinforcement of confidence in the entire semiconductor industry. Because the market has once again confirmed one thing - the story of AI is far from over, and storage is becoming an increasingly important protagonist in this story.

This article is from the WeChat official account "Odaily" (ID: o - daily), written by Azuma and edited by Hao Fangzhou. It is published by 36Kr with authorization.