AI/ML

Micron rides HBM surge to record quarter

Published

Surging demand for high-bandwidth memory (HBM) in AI servers pushed Micron to new quarterly heights.

Revenues in the quarter ended November 27 were $13.64 billion, up 56.6 percent on the year-ago quarter and higher than last quarter’s 46 percent growth rate as the AI surge drove demand higher. There was a GAAP profit of $5.24 billion, a 231 percent year-on-year increase. Profit as a percentage of revenue was 28.3 percent in the prior quarter and is now 38.4 percent.

President and CEO Sanjay Mehrotra said: “In fiscal Q1, Micron delivered record revenue and significant margin expansion at the company level and also in each of our business units.”

Financial summary:

  • Gross margin: 56.0 percent vs prior quarter’s 44.7 percent and year-ago 38.4 percent
  • Operating cash flow: $8.41 billion vs year-ago $3.24 billion
  • Free cash flow: $3.9 billion
  • Diluted EPS: $4.60 vs year-ago $1.67
  • Cash, restricted cash & marketable investments: $9.7 billion vs year-ago $6.7 billion

Total revenue, DRAM and NAND sales, HBM, data center revenue, and each business unit all hit record levels. Micron noted that sustained and strong industry demand, along with supply constraints, are contributing to tight market conditions, and it expects these conditions to persist beyond calendar 2026.

DRAM revenues amounted to $10.8 billion, up 69 percent year-on-year, while NAND revenues fared less well, rising 22 percent year-on-year to $2.7 billion.

The four business unit results varied, with HBM driving Cloud revenues much higher than the others:

  • Cloud: $5.3 billion, up 99.5 percent year-on-year
  • Core Data Center: $2.4 billion, up 3.8 percent
  • Mobile & Client: $4.3 billion, 63.2 percent higher
  • Automotive & Embedded: $1.7 billion, increasing 48.5 percent

Over the last few months, customers’ AI datacenter build-outs have driven a sharp increase in demand forecasts for memory and storage. “We believe that the aggregate industry supply will remain substantially short of the demand for the foreseeable future,” Micron said.

Micron intends to maximize production output from its fabs, ramping up the output of denser technology nodes and investing in new fab cleanroom space to increase its output. Specifically, additional cleanroom space is necessary to address increased HBM demand, and lead times for cleanroom build-outs are lengthening across geographies.

“We are pulling in our first Idaho fab timeline, and we now expect first wafer output in mid-calendar 2027, earlier than our prior expectations of second-half calendar 2027. Earlier this year, we announced our plans for a second Idaho fab, which will begin construction in 2026 and be operational by the end of 2028.

“We plan to break ground on our first New York fab in early calendar 2026, which we expect will provide supply in 2030 and beyond… In Singapore, our HBM advanced packaging facility is on track to contribute meaningfully to our HBM supply in calendar 2027.”

There will be no new fab cleanroom capacity in 2026.

Memory production for calendar 2026 is sold out, including HBM4. Micron is forecasting an HBM TAM CAGR of approximately 40 percent through calendar 2028, from approximately $35 billion in 2025 to around $100 billion in 2028. This 2028 HBM TAM projection is larger than the size of the entire DRAM market in calendar 2024.

Micron reckons it’s in the best competitive position in its history and is one of the semiconductor industry’s biggest enablers of AI.

Turning to the outlook, Mehrotra said: “Our Q2 outlook reflects substantial records across revenue, gross margin, EPS and free cash flow, and we anticipate our business performance to continue strengthening through fiscal 2026.”

Micron is guiding next quarter’s revenues to be $18.7 billion ± $400 million, an astounding 132.3 percent rise at the midpoint on the year-ago Q2, with gross margin increasing from this quarter’s 56 percent to 67 percent ± 1 percent.

Diluted EPS is set to rise to $8.19 ± $0.20 from this quarter’s $4.60, a 78 percent rise. Applying that rise to this quarter’s GAAP profit gives $9.3 billion as next quarter’s possible profit, 51.1 percent of forecast revenues.

micron dram flash hbm ai-ml