Micron Technology Inc. shares fell 0.37% to $1,047.92 during the regular session on Wednesday, but surged +15.84% in after-hours trading. This followed Micron’s F3Q26 earnings report, which significantly exceeded expectations with revenue of $41.5bn and EPS of $25.11, both well above market forecasts. The company also achieved a record gross margin (GPM) of 84.9%, reflecting stronger-than-expected pricing power for DRAM/NAND.
Kasikorn Securities reported that MU posted EPS for 3Q26FY representing an impressive 1,385% YoY growth and 23% above street estimates, driven by revenue that rose 346% YoY and 74% QoQ, surpassing expectations by 17%. Gross margin reached 84.6% this quarter, outperforming the market’s expectation of 81.8%. DRAM revenue grew 67% QoQ, driven by Bit growth of 3% QoQ and ASP growth of 62% QoQ. NAND revenue expanded 99% QoQ, with Bit growth at 5% and ASP growth around 85% QoQ.
Data center revenue in 3Q26 stood at $25bn, with Annual Recurring Revenue (ARR) already surpassing $100bn. During the quarter, the company signed 16 new Strategic Customer Agreements (SCA), up from one in the previous quarter. This included four major and three midsize clients, aimed at reducing earnings volatility. Most of these contracts span five years, from 2026–30. Collectively, the 16 contracts now account for 20% of DRAM shipments and one-third of NAND shipments, equating to about 25% of total revenue. Terms include both fixed price, price bands, and ceiling prices based on the price in 2Q26CY.
After securing all SCAs, customers under fixed price or those with a price ceiling based on 2Q26CY collectively account for 40% of total revenue. For floor price segments, the company foresees gross margins above any previous peak, at around 60%. The strength of these SCAs is underscored by unrestricted cash deposits of up to USD 22bn from customers, enforced as Take-or-Pay Agreements. This benefits Micron with enhanced demand visibility and committed volume, facilitating large-scale CAPEX investment and fostering closer technology partnerships. In turn, customers benefit from assured supply and access to leading-edge technology in the long term.
MU anticipates supply will increase by 2028 but believes it will still fall short of fully meeting demand. Greenfield expansion requires time and resources, and technology transitions are yielding less bit growth per node. The high HBM trade ratio and ongoing cleanroom shortages remain key constraints. Industry-wide, cleanroom capacity has shifted from NAND to DRAM, tightening NAND supply and supporting ongoing price increases. Other players like SNDK and Kioxia are cautiously expanding as well.
MU expects industry DRAM delivery to see 20–25% growth, while NAND bit shipments will be at 20% for 2026. Although MU’s NAND delivery lags the industry, future expansion of all fabs should close this gap.
Kasikorn Securities sees potential for market upgrades to EPS and PE due to the clarity provided by the SCAs secured this quarter. These developments could shift the perception of memory from a commodity to a necessity in the AI era. Ongoing tight supply should further boost ASPs. The current 12-month forward PE is at 10.x. However, the main risk remains with SCA contract structures during down cycles; the market worries about the potential GPM impact as new supply comes online and whether the next quarter’s GPM, which has just hit 86%, can be further sustained.
Bualuang Securities emphasized that the most critical factor was not just the earnings beat but also the F4Q26 guidance, with projected revenue of $50bn and EPS around $31—well above previous consensus, confirming their preview view that F4Q26 guidance is the turning point determining whether F3Q26 is only a strong quarter or the start of ongoing EPS revision.
Another positive sign comes from the 16 strategic customer agreements and around $22bn in financial commitments/deposits, which validate that this AI Memory Cycle has a higher runway than previous cycles and mitigates the traditional boom-bust risk for memory businesses.
Overall, sentiment toward MICRON01, a depositary receipt of Micron in the Thai stock market, has turned increasingly positive, fueled by the earnings and guidance beats and a clearer cycle outlook. While the stock may face short-term profit-taking, the current momentum is notably stronger than typical “sell-on-fact” situations, as post-earnings numbers, guidance, and strong customer commitments all support the rally.
