Micron Technology delivered a blowout fiscal third quarter, reporting $41.46 billion in revenue and beating expectations by nearly $6 billion. The company also guided for gross margins of 86%, pushing its market value to $1.16 trillion after shares jumped more than 13% in after-hours trading.
Memory sector rally accelerates
Micron’s stock has surged more than 850% over the past year, closing at $1,211.38 on June 22 and ranking among the top performers in the S&P 500. Competitors SK Hynix and Samsung have also posted sharp gains of roughly 800% and 400%, respectively, as momentum builds across the memory segment.
Despite the rally, valuations remain relatively low. Micron trades at about 9 times forward earnings, while SK Hynix and Samsung sit at 5.9 and 5.4, respectively. This compares with 23 for Nvidia and 36 for the semiconductor industry median. Profit growth has outpaced share gains, with Micron’s quarterly earnings per share rising to $25.11 from $1.91 a year earlier.
AI demand reshapes memory economics
Demand for high-bandwidth memory (HBM), DRAM, and NAND continues to climb as AI servers require significantly more capacity to process data. Micron reported $25 billion in data-center revenue for the quarter, including $5 billion from enterprise SSDs, accounting for one-fifth of that segment.
Industry supply dynamics are tightening as manufacturers shift production toward higher-margin HBM. This transition is limiting output of traditional DRAM and contributing to sustained price increases. Analysts note that HBM demand has disrupted the decades-long trend of DRAM costs steadily declining.
TrendForce data showed contract DRAM prices jumped 90% to 95% in the first quarter from the previous quarter. Morgan Stanley expects the upward pricing trend could persist for up to four years.
Upcoming earnings to test momentum
Results from major semiconductor companies in the coming weeks are expected to confirm whether the trend continues. TSMC is scheduled to report on July 16, followed by Samsung on July 23 and both SK Hynix and Western Digital on July 29.
Micron’s forecast for $50 billion in fourth-quarter revenue and 86% gross margins has set a high benchmark across the industry.
TSMC previously reported $35.9 billion in first-quarter revenue, up 40.6% year-on-year, with advanced nodes accounting for 74% of wafer sales. Each wafer produced increases downstream demand for HBM, further tightening supply.
Samsung is projected to post operating profit of about â‚©88.3 trillion with margins near 66%. HBM4 is expected to make up more than half of its HBM sales from the third quarter. SK Hynix, which holds about 62% of the HBM market, reported â‚©52.6 trillion in first-quarter revenue, up 198% year-on-year, with operating margins exceeding 70%.
NAND supply constraints add pressure
While HBM expands, NAND supply remains constrained following steep price declines in 2022 and 2023 that led producers to cut capital expenditures. New capacity is not expected before 2027, even as AI inference and the replacement of HDDs drive demand for enterprise SSDs.
Western Digital reported 48% year-on-year growth in cloud-related revenue, with gross margins reaching 50.5%. Enterprise SSD revenue globally rose 86% quarter-over-quarter in the first quarter of 2026.
Some manufacturers have already fully booked NAND output for 2026, with prices for 1 Tb TLC chips more than doubling from $4.8 in July 2025 to $10.7 by year-end.
Structural shift extends beyond AI
The surge in demand for high-performance computing is not limited to AI. Blockchain-based systems are also contributing to rising demand for hardware, particularly in emerging sectors focused on decentralized physical infrastructure networks.
These networks use token-based incentives to coordinate computing power, storage, and bandwidth, adding another layer of competition for semiconductor supply.
At the same time, the economics of computation are shifting. Allocating power to AI workloads can generate three to four times more revenue than traditional crypto mining, prompting some public mining companies to pivot toward high-performance computing services. Projections suggest mining could account for less than 20% of their revenue by the end of 2026.
Supply constraints redefine pricing power
The reallocation of production capacity toward HBM is creating persistent shortages in conventional memory products, affecting supply chains across multiple industries. Companies reliant on large-scale computing infrastructure face rising costs and limited component availability.
Forward earnings multiples across the memory sector remain in the single digits, signaling that markets have yet to fully reflect the industry’s improved pricing power.
The shift suggests memory chips are no longer behaving like traditional cyclical commodities. Instead, sustained demand and constrained supply are creating a more durable and profitable market environment for semiconductor producers.
Explore AI‑driven chip volatility and crypto correlations in our latest market outlook: read the full analysis here.
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