TLDR
- Micron delivered Q2 revenue of $23.9B with EPS of $12.20, surpassing analyst expectations by 21% and 36% respectively
- Forward guidance for May quarter projects $33.5B revenue and EPS of $19.15, exceeding consensus by 42% and 70%
- Q3 gross margin guidance stands at 81% — surpassing Nvidia’s 75% threshold
- Multiple analysts elevated price targets, with Citi and UBS at $510 and Cantor Fitzgerald reaching $700
- MU declined approximately 4% in after-hours trading following the earnings release due to capex and margin sustainability concerns
Micron Technology delivered what ranks among the most impressive quarterly performances in company history, yet shares retreated following the announcement. The market reaction caught many observers off guard.
The semiconductor memory specialist announced fiscal Q2 revenue reaching $23.9 billion — representing a 196% year-over-year surge and a 75% sequential increase. Adjusted earnings per share reached $12.20, marking a 682% climb from the comparable prior-year period.
These figures exceeded Wall Street projections by 21% for revenue and 36% for earnings.
Chief Executive Sanjay Mehrotra highlighted that revenue across DRAM, NAND, HBM, and all business segments achieved record levels. The ongoing expansion of AI data center infrastructure continues to generate robust demand for high-bandwidth memory and storage solutions.
Despite these achievements, MU shares declined roughly 4% during extended trading following the release.
Investor concerns centered on two primary factors. First, Micron increased its capital expenditure projections for fiscal 2027. Second, market participants questioned whether gross margins might be reaching their peak — although an 81% margin represents an exceptional achievement for a hardware producer.
The equity had already climbed 354% over the preceding twelve months before the earnings announcement, making some degree of profit-taking a reasonable expectation.
Analyst Reaction
Citi analyst Atif Malik maintained his Buy recommendation while elevating his price target to $510 from $430, emphasizing margins that exceeded expectations. He characterized the central question facing investors as whether MU can continue advancing alongside DRAM pricing — driven by AI demand and constrained new fabrication capacity — or whether pricing moderates following a robust Q1 period.
Malik acknowledged a possible near-term shift toward semiconductor capital equipment stocks given the elevated capex outlook.
UBS analyst Timothy Arcuri similarly increased his target to $510 from $475, maintaining a Buy stance. His assessment carried a more cautious tone, observing that with gross margins now exceeding 80%, substantial additional upside from continued outperformance may already be incorporated into the valuation.
UBS also highlighted new long-term supply agreements Micron secured, including one five-year contract — extending beyond UBS’s initial expectations. The firm interprets these arrangements as evidence that customers regard memory as strategically essential.
Additional analysts joined with target increases. Cantor Fitzgerald established a $700 target. Rosenblatt advanced to $600. Wolfe Research elevated guidance to $550.
Outlook and Valuation
The May quarter guidance represented the standout element of the report. Micron forecasted revenue of $33.5 billion with EPS of $19.15 — exceeding consensus estimates by 42% and 70% respectively.
Gross margin guidance arrived at approximately 81%, advancing from 38% in Q3 fiscal 2025 and 75% in Q2 fiscal 2026.
On a forward price-to-earnings basis, MU currently trades at merely 8x — representing historically compressed multiples for an equity expanding at this velocity. However, some analysts interpret a single-digit forward multiple on a cyclical semiconductor stock as a cautionary signal rather than an attractive entry point, given the market’s tendency to price in cyclical peaks well in advance of their actual arrival.
UBS maintains a historical perspective that Micron typically reaches valuation peaks approximately nine months before margin peaks materialize.
As of the latest regular trading session, MU was quoted at $443.52 before retreating to $395.14.
