Micron Technology Q1 Earnings Call Highlights

Micron Technology (NASDAQ:MU) executives used the company’s fiscal first-quarter 2026 post-earnings Q&A call to emphasize a supply-constrained environment across DRAM and NAND, with demand accelerating broadly—particularly in data center—while the company ramps technology transitions and expands capacity to support growth.

Supply constraints and bit growth plans

Management repeatedly returned to the theme that industry demand for both DRAM and NAND is exceeding supply. Chief Business Officer Sumit Sadana said Micron is “not really able to meet the demand for customers across any segment,” adding that both HBM and non-HBM markets are short and that the mismatch is expected to continue “for the foreseeable future.”

Chief Financial Officer Mark Murphy said Micron is “doing all we can to increase bit supply now,” and expects to deliver approximately 20% bit shipment growth in fiscal 2026. He attributed the company’s supply growth to efficiency work within existing fabs and to technology transitions, including the DRAM 1-gamma node and the NAND Gen9 node.

Murphy characterized fiscal Q1 bit shipment growth as “very modest” sequentially, with expectations for somewhat higher growth in fiscal Q2, while noting that revenue growth is “primarily driven by price.”

Pricing, allocation, and data center mix

Asked about how Micron allocates capacity between conventional DRAM and high-bandwidth memory (HBM) amid improving conventional DRAM profitability, Sadana said allocation decisions are complicated by broad undersupply and the need to limit disruptions for customers. He said Micron is working to establish “the threshold level of supply” for customers and remains focused on diversification across segments while prioritizing strategic customers through longer-term agreements.

Sadana also noted that Micron’s product and customer mix will tilt more toward data center over time, in line with the industry’s total addressable market shifting in that direction. In response to questions about potential minimum “floor” levels for embedded and automotive supply, he highlighted Micron’s position in mission-critical end markets and said the company is investing in its Manassas, Virginia fab to modernize it and bring 1-alpha DRAM technology to support long-lifecycle products.

Management also addressed concerns that DRAM availability could limit the PC market, saying it is balancing competing requirements and is “not just focused on optimizing gross margin.” Sadana added that in tight markets, pricing tends to better reflect product value and segment margin performance can converge.

HBM sold-out commentary and product cadence

Executives said Micron has high visibility into its HBM supply for 2026 and has already reached agreements with customers on volume and price. Sadana said if Micron can generate upside supply, it can place that supply quickly, but emphasized that overall demand is substantially above supply, leaving “a significant amount of unmet demand” even after any incremental increases.

Murphy added that HBM output is shared with broader DRAM production because HBM and DRAM manufacturing are tied to the same node, reinforcing that the constraint is “across the entire DRAM market.” He also said yields on Micron’s 1-gamma and Gen9 ramps have improved and that transitions are expected to be major contributors to bit growth. Murphy said the company expects the majority of DRAM bits to be on 1-gamma in the second half of next year, and that Gen9 is expected to become Micron’s highest-volume NAND node as the year progresses.

On HBM4, Murphy said both HBM3E and HBM4 are on Micron’s 1-beta process technology and use similar assembly architecture and processes. He said Micron expects the HBM4 yield ramp to be faster than the HBM3E 12-high ramp, leveraging learnings from prior products. Management reiterated that customer platform cadence remains rapid—around 12 months—and said Micron aims to deliver new high-bandwidth memory solutions on roughly that cadence.

Asked how quickly Micron can switch wafer allocation among DRAM product types, Murphy said products share a common process on a given node but have unique designs, meaning changes typically take about one process cycle time. Sadana later framed customer lead times more broadly, saying changes generally require roughly five-plus months, including front-end and back-end manufacturing steps.

Data center SSD momentum and NAND demand

Micron also discussed data center SSD demand, noting both high-capacity and high-performance needs in AI servers. Sadana said attach rates for SSDs in AI servers are “certainly growing,” highlighting Micron’s Gen6 SSD momentum and stating the company was first to supply qualified Gen6 SSDs, which is contributing to share improvement in data center SSDs.

He also emphasized Micron’s position in QLC for high-capacity workloads and said Micron’s QLC bit mix is higher than the rest of the industry. Sadana pointed to workloads such as key-value cache as requiring large, high-capacity SSD deployments.

In addition to AI-driven demand, Sadana said some customers have not had adequate hard disk drive (HDD) supply, increasing demand for SSDs and contributing to NAND being “oversubscribed.” Murphy added that Micron’s SSD business exceeded $1 billion in fiscal Q1 2026, and said the company expects growth in the segment to accelerate through the year as supply-chain issues improve.

Margins, operating expenses, and capital allocation

Murphy addressed questions on gross margin after a call participant referenced a 68% level. He cited AI-driven demand as a multi-year build-out, Micron’s technology and product position, operating performance, capital discipline, and structural supply constraints. While he said gross margin could rise further from fiscal Q2, he also cautioned that increases from current levels would likely be more gradual than the recent step-ups discussed in Micron’s earnings commentary.

On operating expenses, Murphy said Micron expects opex to be “flattish” in fiscal Q3 relative to fiscal Q2, then higher in fiscal Q4, including the impact of an additional week in fiscal Q4.

On capital spending, Murphy said Micron expects 2027 total CapEx to be higher than 2026, and that from fiscal 2025 to 2026 the company plans to roughly double construction CapEx. He referenced multiple construction efforts including Idaho projects and Japan, while Manish Bhatia, EVP of Global Operations, added construction in Singapore and equipping an India assembly site that is moving from pilot production to a production ramp in early calendar 2026. Management said CapEx will include both construction and equipment needs, plus assembly investments for HBM and conventional packaging.

Murphy also highlighted cash flow and balance sheet actions in the quarter, stating Micron generated near 30% free cash flow margin, paid down $2.7 billion of debt, repurchased $300 million of shares, and ended the quarter in a net cash position with record liquidity. On longer-term cash priorities, Murphy said reinvestment in the business remains the top priority, followed by balance-sheet strength, dividend growth over time, and share repurchases—while noting limitations tied to the CHIPS program agreement that are expected to ease over time.

About Micron Technology (NASDAQ:MU)

Micron Technology, Inc is a global semiconductor company that designs and manufactures memory and storage solutions. Its product portfolio includes dynamic random-access memory (DRAM), NAND flash memory, solid-state drives (SSDs), memory modules and embedded memory solutions for a wide range of computing and electronic devices. Micron supplies components used in data centers, enterprise and cloud infrastructure, client computing, mobile devices, automotive systems and industrial applications, and also markets consumer-facing products under the Crucial brand.

Founded in 1978 and headquartered in Boise, Idaho, Micron has grown into an international manufacturer with research, development and production facilities across multiple regions.