Micron Technology (NASDAQ:MU) hit its closing high of $1,213.56 on June 25, the day after the memory maker posted its fiscal third-quarter results. On Oct. 14, the stock ended at $914.13 — around 25% below that record and its lowest close since Aug. 24.
Still, the company has beaten the outlook management gave on June 24, and Micron now sees tighter memory supply through fiscal 2028.
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I think the drop has more to do with where memory prices are heading than with anything going wrong at Micron. And at this price, the stock already reflects a lot of that risk.
Image source: Micron.
Micron has beaten its own June outlook
When Micron reported in June, management called for fiscal fourth-quarter revenue of $50 billion, plus or minus $1 billion, and around $31 in non-GAAP (adjusted) earnings per share. The company posted $54.2 billion in revenue and $33.42 in adjusted earnings per share in the quarter, which ended Sept. 3.
Both numbers topped the high end of management’s guidance.
Showing how fast the business has grown, Micron’s revenue climbed from $23.9 billion in fiscal Q2 to $41.5 billion in fiscal Q3 before reaching $54.2 billion in fiscal Q4. Also, management now forecasts around $61.5 billion in revenue for the first quarter of fiscal 2027, with adjusted per-share earnings of about $38. That per-share forecast is around 23% above the one investors had when the stock set its record.
Management’s view of memory supply has become tighter, too. In June, it said it expected industry supply “to improve gradually in 2028.”
“Industry demand has strengthened since our last earnings call, and we expect memory and storage supply-demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026,” CEO Sanjay Mehrotra said in his prepared remarks for the Sept. 30 call.
Customers have also committed to more of that demand. As Micron signed more multi-year supply deals, the contracted revenue it hadn’t recognized yet (based on minimum prices) rose from over $5 billion at the end of fiscal Q3 to around $134 billion at the end of fiscal Q4.
The stock is pricing a slower boom
Yet the pace of price increases has slowed. Micron’s DRAM prices rose by a high-teens percentage from the previous quarter in fiscal Q4, down from a gain in the low 60s in fiscal Q3. Mark Murphy, Micron’s chief financial officer, said the company expects “a more moderate rate of price increases” for the rest of fiscal 2027.
