Micron Q2 Revenue Nearly Triples, but Massive Spending Plan Triggers Caution

Memory giant Micron Technology ($MU) released its latest quarterly earnings after the bell on Wednesday ET.

For the second fiscal quarter of 2026 (ended late February), the company reported revenue that nearly tripled, comfortably beating analyst estimates. Micron also issued a third-quarter outlook that significantly outpaced market expectations.

Despite the blowout numbers, shares edged lower in after-hours trading. The stock has surged over 350% over the past year.

Financial Highlights vs. LSEG Estimates:

Adjusted EPS: $12.20 (vs. $9.31 expected)
Revenue: $23.86 billion, nearly tripling from $8.05 billion YoY (vs. $20.07 billion expected)
GAAP Gross Margin: Surged to 74.4%, up from 36.8% a year ago and 56% in the previous quarter.

Micron’s performance has been buoyed by the explosive demand for memory chips fueled by the AI boom. CEO Sanjay Mehrotra noted in the earnings statement:

"Our improved performance and outlook stem from AI-driven memory demand, structural supply constraints, and Micron’s excellent execution across the board."

For the current quarter, Micron projects revenue of approximately $33.5 billion, a massive jump from $9.3 billion a year ago and far exceeding the $24.3 billion analyst consensus. Adjusted EPS is expected to reach $19.15, well above the $12.05 estimate.

The Primary Risk: Sky-High Expectations

With the memory market Sizzling, Micron’s stock has been on a "rocket ship" trajectory: tripling in 2025 and rising another 62% year-to-date as of Wednesday’s close.

"Given how these stocks were trading leading up to the report, I believe the biggest risk was simply investor expectations being too high," said Hendi Susanto, portfolio manager at Gabelli Funds. "That said, the Q3 guidance is exceptionally strong, blowing past both analyst and my own estimates."

Mehrotra highlighted that global AI and traditional servers are currently facing a "DRAM and NAND supply deficit." This is partly due to manufacturers shifting capacity toward High Bandwidth Memory (HBM), which offers higher margins.

While memory has traditionally been a lower-margin commodity business with short-term contracts, the industry has seen a shift toward long-term agreements as semiconductor firms scramble to secure future capacity.

"As AI evolves, we expect computing architectures to become increasingly memory-centric... This is why we firmly believe Micron is a primary beneficiary and enabler of AI," the company stated.

Aggressive Capacity Expansion

During the earnings call, Mehrotra confirmed that mass production of HBM4 for Nvidia’s Vera Rubin GPUs began in the first quarter of this fiscal year, with next-gen HBM4e slated for 2027. Nvidia has indicated its future Feynman GPUs will utilize customized HBM materials.

Mehrotra added that capital expenditures (CapEx) will "increase significantly" in fiscal 2027, with construction-related costs set to jump by more than $10 billion.

Micron is currently developing two massive manufacturing campuses in Idaho and New York to bolster U.S. memory production:

Idaho Facility: Initial production is slated for completion by mid-2027.
New York Mega-Campus: Ground was broken in January for this $100 billion project, with wafer production expected to commence in the second half of 2028.