Micron Technology posted a quarter for the history books on Wednesday, sparking an immediate and powerful response from investors.
The semiconductor manufacturer specializing in memory chips revealed fiscal Q3 2026 sales of $41.46 billion, representing a 346% year-over-year surge and landing approximately 17% higher than Wall Street’s projections. The company’s non-GAAP earnings per share reached $25.11, significantly exceeding the consensus forecast of $20.50. Gross margin expanded dramatically to 84.9%, a stark contrast to the 39% recorded in the same period last year.
MU stock climbed 17.1% following the announcement, reaching $1,209 per share — marking a fresh 52-week high.
While the quarterly performance was impressive in isolation, forward-looking guidance proved to be the real catalyst behind the stock’s momentum.
Micron projected fiscal Q4 revenue at approximately $50 billion with earnings per share around $31. These figures substantially exceeded Wall Street expectations, which had anticipated Q4 revenue near $43 billion and EPS of approximately $25.31.
The chipmaker disclosed it has executed 16 Strategic Customer Agreements (SCAs) — binding take-or-pay contracts spanning data center, consumer, and automotive sectors. Fourteen of these arrangements include a combined minimum revenue obligation of $100 billion throughout their duration.
These represent firm commitments backed by real capital. Partners have already deposited $22 billion. Standard SCAs extend five years (2026–2030), while automotive-focused agreements run for three-year periods.
Barclays analyst Thomas O’Malley characterized the SCA disclosures as exceeding expectations in both dollar magnitude and customer count. He boosted his MU price target by 70% to $2,000 from $1,175, applying a 12x multiple to his updated 2027 EPS projection of $166.74.
O’Malley highlighted that existing SCAs represent roughly 20% of total DRAM volume and 33% of NAND volume. After finalizing all pending agreements, Micron anticipates over 50% of its revenue will originate from these contractual commitments.
Data-center segment revenue exceeded $25 billion during the quarter — translating to an annualized run rate surpassing $100 billion.
Micron CEO Sanjay Mehrotra stated the company sees “no line of sight” to supply equilibrium with demand occurring before 2028. DRAM pricing increased in the low-60s percentage range during the quarter, fueled by a fundamental supply shortage affecting the entire industry.
This supply-demand imbalance is visible across competitors as well. Samsung disclosed a 146% spike in DRAM average selling prices during Q1. SK Hynix reported mid-60s percent price increases.
The constrained supply environment is affecting all three leading memory manufacturers.
It’s notable that MU shares had declined 13.6% just 48 hours prior following news that SK Hynix was moderating its high-bandwidth memory (HBM) expansion plans. That selloff now appears to have been an overreaction.
Investors should monitor HBM scaling expenses and new fabrication facility construction, which will contribute approximately $1 billion to FY2027 operating costs, along with the eventual repayment of the $22 billion in customer deposits.
Wall Street maintains a Strong Buy consensus rating on MU, featuring 28 Buy ratings against just one Hold. The average analyst price target of $1,526.67 suggests approximately 36% potential upside from current trading levels.
Micron shares have appreciated 283% year-to-date.
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