Micron Earnings Face High Expectations as Its Stock Keeps Rising
Bloomberg
(Bloomberg) — Soaring prices for memory chips have made Micron Technology Inc. one of the standout stocks of 2026, and its earnings after the close on Wednesday will give clues on whether the rally is sustainable.
Micron shares have soared nearly 65% to start the year, among the best performers in the S&P 500 Index, after jumping 239% in 2025. The biggest US maker of memory chips is benefiting from heavy spending on artificial intelligence computing that’s driving demand for memory and storage components, as are high-flying peers Sandisk Corp. and Western Digital Corp.
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Investors are optimistic that elevated prices for memory chips will bolster Micron’s quarterly results and forecasts. But there are questions about how long the good times will last and whether Micron can live up to expectations.
“This pricing environment won’t last forever, but all signs are pointing to tight supply this year and sold-out capacity next year, so investors can take some comfort that we’re not close to the peak yet,” said Hendi Susanto, a portfolio manager at Gabelli Funds, which has about $35 billion in assets and holds Micron shares. “Because prices look sustainable in the near term and the stock looks pretty cheap, its hard to see significant downside. The biggest risk is probably high expectations.”
Shares gained 0.6% shortly after the market opened on Wednesday.
While other AI infrastructure stocks like Nvidia Corp. have stalled out amid concerns about the sustainability of spending and peaking revenue growth, memory and storage companies continue to climb. Part of that is due to the higher prices they’re able to command as supply remains constrained. An index of spot prices for the dynamic random access memory chips that Micron makes is up more than 500% since the end of September.
Micron shares closed at a record $461.69 on Tuesday, bringing the company’s market value to about $520 billion, up from $100 billion at the end of 2024.
The Boise, Idaho-based chipmaker is expected to deliver fiscal second-quarter net income of $10.1 billion on revenue of $19.6 billion, according to the average of analyst estimates compiled by Bloomberg. That would represent growth of 540% and 144%, respectively, from a year ago.
The memory industry has long been prone to booms followed by brutal busts. Micron lost money as recently as the first quarter of 2024 amid slumping prices. But the magnitude of the current spending and the deep pockets of the companies behind it is expected to make this cycle bigger and longer lasting. And the difficulty of adding significant production capacity has Wall Street betting that memory prices won’t fall anytime soon.
Amazon.com Inc., Microsoft Corp., Alphabet Inc. and Meta Platforms Inc. are projected to plow $618 billion combined into capital expenditures in 2026, up from $376 billion in 2025. That demand should help memory prices “stay elevated at least through 2027,” Bernstein analyst David Dai wrote in a note to clients on March 16.
That said, the pace of Micron’s expansion is expected to cool rapidly in the coming years. Revenue growth is projected to be 116% in fiscal 2026, which ends in August, followed by 36% in fiscal 2027. In 2028, revenue is expected to decline 1%. In addition, there’s the risk of the war in Iran choking off key supplies for the semiconductor industry, including helium.
Micron’s relatively inexpensive stock price is helping to keep investors optimistic that the rally has legs. At less than 10 times estimated earnings, the shares are trading below their 10-year average of multiple of 16 and less than half the valuation of the tech-heavy Nasdaq 100 Index and the Philadelphia Stock Exchange Semiconductor Index.
Micron’s growth outlook and pricing power are reasons to be confident in its multiple, according to Larry Tentarelli, chief technical strategist for Blue Chip Daily, who added that the shares don’t look over-extended going into the earnings report.
“Micron’s probably a $500 stock, but the big caveat is they just have to deliver,” he said. “If there’s a group of stocks I want to be long into earnings, it’s these memory stocks.”
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Alibaba Group Holding Ltd. is raising prices for its AI computing and storage products by as much as 34%, in response to demand and rising infrastructure costs.
Samsung Electronics Co. is considering a shift toward multi-year contracts for memory chips, a much longer timeframe than is typical that may help stabilize supply and ease concerns about a shortage of the essential components.
Nvidia Corp. Chief Executive Officer Jensen Huang said the company is firing up manufacturing of H200 AI accelerators for customers in China, a sign of progress in the chipmaker’s effort to reenter the vital market.
Swarmer Inc. shares skyrocketed as much as 700% on Tuesday, making the artificial intelligence drone software company’s debut the best trading by a US stock since Newsmax Inc.’s blockbuster entry nearly a year ago.
Earnings Due Wednesday
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–With assistance from Carmen Reinicke, Subrat Patnaik and David Watkins.
