Micron: Financial Outlook Stronger Than March, Tight Memory Supply Expected to Last Beyond 2026

Micron has released more optimistic signals at the J.P. Morgan Global Technology, Media and Communications Conference: the company's financial prospects have significantly improved compared to the March earnings call, and it is expected that the third quarter of fiscal year 2026 will once again record a substantial record-high free cash flow.

The management believes that the supply and demand tightness for HBM, DRAM, and NAND will continue beyond 2026, with market demand consistently exceeding the supply capacity of Micron and the entire industry. This judgment is based on structural changes occurring on both the demand and supply sides:

• On the demand side, AI workloads are shifting from human interactions to interactions between intelligent entities and machines. As the proportion of inference increases, the requirements for memory capacity, bandwidth performance, and storage reliability have significantly increased.

• The constraints on the supply side are more difficult to alleviate in the short term. Micron points out that the efficiency of bit growth brought by DRAM and NAND process migration has significantly fallen below historical levels, and the industry can no longer rely mainly on technological iteration to release enough additional supply as in the past.

In addition, the production of HBM further occupies the wafer capacity of traditional DRAM. Since HBM chips are larger, the number of wafers required to produce the same bit capacity is more than three times that of traditional DRAM, and this ratio will further worsen following the transition from HBM3E to HBM4 and HBM4E.

There are still certain disagreements in the market in the short term. Micron did not officially update the guidance for the May quarter before the end of the quarter, merely stating that it will provide specific details at the next earnings call, which also prevents the market from directly verifying the specific changes in its revenue, gross margin, and earnings per share for the time being.