Record Financial Results
Micron released its fiscal Q4 2026 financial results on Wednesday, setting another record for revenue with $54.23 billion for the quarter, up nearly five times since the same period last year. Micron also hit a record 87% gross margin, the largest contributor to which was Micron's Mobile and Client consumer business unit. Further, the client business was the only one that shipped less memory last quarter, despite bringing in the highest operating margin at 88%.
Micron's margins overall are up significantly year-over-year. Core Data Center surged from 25% to 85%, and Automotive and Embedded climbed from 20% to 79%. The Mobile and Client unit also saw significant growth, moving from a 29% operating margin in fiscal Q4 2025 to a margin of 88%. Cloud Memory margins grew from 48% to 76%.
In a financial statement, gross margin equals revenue minus the cost of goods sold. Operating margin equals revenue minus the cost of goods and all other operational expenses, excluding taxes and interest.
The Mobile and Client unit has the smallest gap between gross and operating margin, showing only a 2% difference. The Core Data Center unit matches the consumer unit with a 90% gross margin, but it maintains a lower operating margin of 85%, indicating that running the consumer business involves very low operating costs relative to its generated revenue.
Consumer Market Trends
The consumer division saw the lowest amount of growth for the quarter, with revenue up 14% quarter-over-quarter. Micron states this growth was driven by higher pricing, which was partially offset by lower bit shipments.
Micron measures shipments in bits rather than individual units, reflecting the total data capacity shipped in a quarter rather than the raw number of DRAM or NAND chips.
Outside of the Mobile and Client division, higher revenue was attributed to both higher pricing and increased bit shipments. The consumer market situation underscores a broader trend where market growth is propelled by elevated pricing rather than expansion in shipment volumes.
Earlier in the year, Intel CFO David Zinsner attributed a 13% year-over-year growth in Intel's consumer business to higher average selling prices rather than increased unit sales, noting the need to pass rising costs on to end customers.
Future Market Outlook
Micron's outlook for fiscal Q1 2027 projects another record revenue of $61.5 billion, with gross margins rounding to 86.25%.
This points to a continued squeeze on the DRAM and NAND markets. Echoing rival SK hynix, Micron expects memory and storage supplies to remain much tighter through 2027 and 2028, keeping the industry supply-constrained despite anticipated supply growth.
The company projects industry NAND bit shipments to grow in the mid-20% range and DRAM bit shipments to grow in the low-20% range. While overall memory production will increase over the next two years, supply is expected to lag behind demand.
Micron noted in its earnings presentation that it currently lacks visibility on when supply and demand will return to balance. However, the company plans to increase capital expenditures in fiscal 2027 compared to previous estimates.
A majority of the increased spending is allocated for constructing additional clean room space slated for completion between 2028 and the end of the decade, which should eventually help ease market constraints.
