MICRON Technology reported fiscal fourth-quarter revenue of $54.23 billion, up 379 percent year-over-year, with net income surging to $37.7 billion from $3.2 billion. Management projects fiscal Q1 2027 revenue between $60 billion and $63 billion.
Yet the stock has fallen 34 percent from its all-time high as investors fret over a potential slowdown in AI infrastructure spending. That concern misses the structural tightness in memory supply.
Micron manufactures DRAM, NAND flash, and high-bandwidth memory—all critical for advanced AI processors. The memory chip market faces a severe shortage. SK Hynix confirmed its DRAM and HBM production is sold out through 2029. SK Hynix CFO Woo-hyun Kim told analysts that these memory shortages could extend through 2030, citing the multi-year timeline required to build additional manufacturing capacity.
Micron is experiencing the same robust demand. During the September earnings call, CEO Sanjay Mehrotra stated that a large portion of Micron's HBM production for calendar 2027 is already sold out. Mehrotra noted that 2027 prices are substantially higher than 2026 contracts.
The supply crunch extends beyond specialized AI memory. HBM manufacturing demands considerably more production capacity than conventional DRAM. Manufacturers diverting resources to HBM have less capacity available for memory used in computers, smartphones and conventional servers. This resource reallocation allows Micron to increase prices across its entire portfolio, not just HBM.
The projected non-GAAP gross margin for fiscal Q1 2027 is approximately 86.25 percent—an extraordinary level of profitability for the historically cyclical memory industry.
While memory shortages will not persist indefinitely as Micron and competitors expand production, there is little evidence the current supply shortage is easing soon. A slowdown in AI infrastructure spending could eventually weaken demand and pricing, but that remains a future risk, not an imminent one.
Micron's stock pullback presents an attractive entry for investors with conviction in AI infrastructure. The company has pricing power that few semiconductors enjoy, with customers securing production years in advance. That translates into considerable room for earnings growth and cash return to shareholders.
