Micron Technology (MU.US) reported record financial results during its FY2026 Q1 earnings call. The company posted quarterly revenue of $13.6 billion, up 21% sequentially and 57% year-over-year, driven by price increases, cost controls, and product mix optimization. Gross margin reached 56.8%, a sequential improvement of 11 percentage points, while non-GAAP diluted EPS surged to $4.78 (up 58% QoQ, 167% YoY). Free cash flow hit a quarterly record of $3.9 billion.

Management highlighted tightening DRAM and NAND supply-demand dynamics across the industry, expected to persist beyond 2026, fueled by AI data center deployments. DRAM bit demand growth for 2025 was revised upward to ~20% (from >15%), with NAND bit demand growth exceeding 15% (previously 10%-15%). Industry-wide DRAM/NAND shipments are projected to grow ~20% in 2026 versus 2025.

HBM demand (currently at a 3:1 ratio vs. DDR5 and widening) is exacerbating supply constraints, compounded by potential cleanroom construction delays. Micron has secured multi-year agreements covering 2026 HBM supply (including HBM4) with pricing and volume commitments. AI-driven data center expansion continues to accelerate demand for high-performance memory solutions, including HBM, high-capacity server DRAM, and data center SSDs. The company’s first PCIe Gen 6 SSD is undergoing rapid certification.

**Key Updates**: - FY2026 capital expenditure raised to ~$20 billion (from $18 billion), primarily to expand HBM and 1-gamma node capacity. - HBM3E production remains robust, with HBM4 sampling expected by mid-2026. HBM4 boasts industry-leading performance (>11 Gb/s) and power efficiency. - Micron anticipates the HBM market to reach $100 billion by 2028—two years earlier than prior estimates.

**Q&A Highlights**: 1. **Long-Term Agreements (LTAs)**: Negotiations with key customers include binding DRAM/NAND commitments extending to 2026–2028, featuring stronger contractual terms than historical LTAs. 2. **Capex Discipline**: Despite increased spending, capital intensity remains below the historical 35% target due to fab space constraints. Micron emphasized balanced supply-demand alignment. 3. **Cost Trends**: DRAM/NAND cost reductions continue, though HBM4 ramp-up may temporarily impact yields. 1-gamma DRAM and G9 NAND scaling will offset these effects. 4. **Competitive Positioning**: Micron’s HBM4 outperforms rivals in speed and power efficiency, with HBM3E consuming 30% less power than competitors. 5. **Pricing Dynamics**: 2026 HBM supply is fully committed with locked-in pricing, while non-HBM DRAM pricing remains flexible.

**Outlook**: - Data center SSD demand is rising alongside AI inference workloads. - Consumer electronics may face unit demand pressure from memory price hikes, but AI-driven memory needs across edge devices (PCs, smartphones) remain resilient. - Gross margins are expected to expand further in FY2026, albeit at a moderated pace.

Micron reiterated its focus on maximizing high-value segments while maintaining supply discipline in a structurally undersupplied market.