Earnings call transcript: Micron Q4 2025 beats expectations, stock dips

Micron Technology Inc. reported its fourth-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $3.03 against a forecast of $2.77, marking a 9.39% surprise. Revenue reached $11.32 billion, exceeding the $11.11 billion forecast. The company maintains a strong financial position with a "GREAT" overall health score according to InvestingPro analysis. Despite these strong results, the stock experienced a 1.77% decline in after-hours trading, closing at $161.71, down from $164.62.

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Key Takeaways

• Micron’s EPS and revenue both exceeded forecasts, indicating strong performance.
• The stock fell by 1.77% in after-hours trading despite the earnings beat.
• Gross margin exceeded 50% for the first time since 2018.
• The company announced significant advancements in its HBM4 product line.
• CAPEX is projected to increase to $18 billion in 2026, focusing on DRAM.

Company Performance

Micron’s performance in Q4 2025 reflects a robust operational strategy, with gross margins surpassing 50% for the first time since 2018. The company reported a strong operating margin, the highest since November 2018, driven by significant contributions from its HBM and high-capacity DIMM revenues, which totaled $10 billion for fiscal 2025. These results underscore Micron’s competitive edge in the data center and AI-driven memory markets.

Financial Highlights

• Revenue: $11.32 billion, surpassing forecasts of $11.11 billion.
• Earnings per share: $3.03, exceeding the expected $2.77.
• Gross margin: Over 50%, a milestone not reached since 2018.

Earnings vs. Forecast

Micron’s EPS of $3.03 outperformed the forecast of $2.77, resulting in a 9.39% earnings surprise. This marks a continuation of the company’s trend of exceeding market expectations, highlighting its operational efficiency and strong market demand for its products.

Market Reaction

Despite the positive earnings report, Micron’s stock fell by 1.77% in after-hours trading to $161.71. This decline may reflect investor concerns about future capital expenditures and the broader market’s cautious sentiment. Technical indicators from InvestingPro suggest the stock is in overbought territory, though the stock’s performance remains robust with a 179.74% return over the past six months and trading near its 52-week high of $201.

Outlook & Guidance

Micron projects continued strength in the DRAM market, anticipating a tightening in 2026. The company is also optimistic about improvements in the NAND market and expects significant bit growth from its one-gamma DRAM process in fiscal 2026. Analysts share this optimism, with consensus forecasts showing EPS reaching $16.87 in FY2026, and price targets ranging from $100 to $250. Capital expenditures are set to rise to $18 billion in 2026, primarily for DRAM development.

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Executive Commentary

Sumit Sadana, Micron’s Chief Business Officer, highlighted the transformative impact of AI on the memory market, stating, "AI has radically changed the landscape." He also emphasized the company’s strategic foresight, noting, "We are being thoughtful about all of these different factors."

Risks and Challenges

• Supply chain disruptions could impact production timelines.
• Market saturation in certain segments may pressure pricing.
• Macroeconomic pressures, such as inflation, could affect costs.
• Technological advancements by competitors may erode market share.
• Regulatory changes in key markets could impact operations.

Q&A

During the earnings call, analysts inquired about Micron’s HBM4 performance and its market positioning. The company also addressed its exit from the managed NAND market and detailed strategies for cost reduction. Additionally, executives discussed the potential impacts of new GPU architectures on memory demand.

Micron’s strong earnings performance and strategic initiatives position it well for future growth, despite a mixed market reaction. The company’s focus on innovation and market leadership in memory technologies continues to drive its success.

Full transcript - Micron Technology Inc (MU) Q4 2025:

Conference Operator: Thank you for standing by and welcome to Micron Technology’s post-earnings analyst conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. To remove yourself from the queue, you may press 11 again. I would now like to hand the call over to Satya Kumar, Investor Relations. Please go ahead.

Satya Kumar, Investor Relations, Micron Technology: Thank you, and welcome to Micron Technology’s fiscal fourth quarter 2025 post-earnings analyst call. On the call with me today are Sumit Sadana, Micron’s Chief Business Officer, Manish Bhatia, EVP of Global Operations, and Mark Murphy, our CFO. As a reminder, the matters we’re discussing today include forward-looking statements regarding market demand and supply, market trends and drivers, and our expected results and guidance in other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We refer you to documents that we have filed with the SEC, including our most recent Form 10-Q and upcoming 10-K for a discussion of risks that may affect our results. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, and achievements.

We are under no duty to update any of the forward-looking statements to confirm these statements to actual results. With that, we can now open up for Q&A.

Conference Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone. Please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tom O’Malley of Barclays. Please go ahead, Tom.

Hey, guys. Thanks for taking my question. My first one is just on the state of industry of NAND. Over the last couple of weeks, you’ve heard a lot of reports about hyperscalers stepping in. You’ve heard about tightness, pricing increases. If you look at your current quarter that you just reported, you had bits down in the quarter. I’ve tried a couple of different ways here to tell me if I’m crazy, but it seems like you need to have bits down again in your guide to kind of get there, largely driven by ASPs. Is that the right way to think about the world right now? Some of your peers are talking about some big growth going into the back half. Is that something that you’re going to look to ease up with potentially some capacity additions?

Anything that you can comment on to the state of the world right now? Thanks.

Sumit Sadana, Chief Business Officer, Micron Technology: Yeah, hi. This is Sumit. I’ll just take the question. In terms of the NAND industry, I wouldn’t read too much into the bits for FQ4. It’s really just noise based on a few things, different segments moving around in our mix. It’s really just some mix-driven noise for the various segments. In terms of the demand profile and what is shaping up looking ahead, certainly, the large hyperscalers are looking like they will be needing significantly more storage capability for their AI server deployments because they have shortages on that side from the HDD segment of the market. The deployment of NAND SSDs in servers and data centers more broadly is going to increase in calendar 2026. We expect, driven by that tailwind, for the NAND industry conditions to start improving.

Certainly, our position in the data center SSD market, where we have been hitting record share after record share for several years now and have a really strong position in the market, allows us to benefit from that data center SSD competitive position that we have. We have announced a lot of new products. We have a very exciting portfolio. We expect to be able to leverage that going forward. I think the NAND industry will improve, with the improvement in the DRAM business definitely ahead from a time perspective. In terms of being tight, NAND is improving and getting tighter, but DRAM is tight already today and getting even tighter going forward.

Mark Murphy, CFO, Micron Technology: Yeah, Tom, it’s Mark. I would just add on the supply side, continue, you know, we structurally brought down wafer outs in NAND, continue to slow node transitions there and pace new node ramps. Still have low levels of CAPEX and still working down inventories there.

Manish Bhatia, EVP of Global Operations, Micron Technology: Yeah, I was going to add, we’re working down inventories, and now with our decision to exit managed NAND, you know, there’ll be more supply availability for us to focus on the data center market as Sumit was mentioning.

Helpful. Just as a quick follow-up, if I look at the CAPEX guidance, you’re saying kind of an annualized Q1, you get to $18 billion. I just want to make sure you’re saying that’s a net number. Obviously, something higher in aggregate. In your commentary in the slides, it seems like very little additional NAND spend and more on the DRAM side. Just on a very high level, I know you’re not guiding specifically. Should we be taking away from this that you’re moving from $13-something to close to $20-something and that incremental is largely a function of additional DRAM spend? Thank you.

Mark Murphy, CFO, Micron Technology: We’re just going to give in that number, Tom. We’re saying that we’re going to go from $13.8 billion net in 2025 to, you know, net approximately $18 billion in 2026. The vast majority of that is for DRAM construction and equipment.

Thank you, Mark. Appreciate it, guys.

Conference Operator: Thank you. Our next question comes from the line of Joseph Moore of Morgan Stanley. Please go ahead, Joe.

Great, thank you. Sanjay, early on in the call, talked about taking market share in HBM in calendar 2026, if I heard him right. I know that would sort of happen mechanically because you got to your target share towards the end of this year. You would gain share. Can you just talk about, you know, what are your share gain aspirations in HBM, if any? Are you content with holding your DRAM share? Does that need to go higher?

Sumit Sadana, Chief Business Officer, Micron Technology: Yeah, in terms of our HBM share, you’re right. We have ramped our share through calendar 2026, and we expect to be in the vicinity of our DRAM supply share in calendar Q3 in 2025. In 2026, for the full calendar year, we will expect to have higher share in HBM compared to calendar 2025. HBM has now become a very robust part of our portfolio, and we treat it like any other part of our portfolio where we focus on ROI of the portfolio, we focus on disciplined investments, we focus on getting to be the best from a product perspective and creating that value with our customers, and then ensuring that we are taking full advantage of the competitive landscape as it evolves over time. Those are some of the things we do.

We’re not going to provide any more specifics beyond that, but that’s how we are thinking about it.

Okay, that’s helpful. Thank you. The gross margins in HBM, will that continue to be higher than, you know, sort of non-HBM DRAM? If given that you’re locked in through most of 2025 and DDR5 is moving up, is it possible that that changes? Does that lock-in actually hurt you if DDR5 prices rise faster?

Yeah, I mean, I don’t think about the lock-in as "hurting us" because the two businesses, the HBM portion of it and the non-HBM DRAM, are just different types of businesses. The HBM business, we are working with customers with long lead times, long order visibility, lock-in of volumes, lock-in of pricing well ahead of time, a lot more stable ROI over the years. That kind of a profile is helpful because no matter what the rest of the business does, our expectation is that the HBM business will have higher through-cycle ROI. We manage that business in that different way. It creates a lot of value for our customers, and we have that expectation of a higher ROI for us in our portfolio.

Now, will there be times when the rest of the DRAM portfolio will become very profitable and can challenge or even exceed at times the profitability of the HBM business? Of course, that is possible. We don’t think of that as a bad thing. We think of that as a positive thing that the whole business has become dramatically better. That’s how we think of it as, you know, those outcomes are a good place to be because that means the whole industry is extraordinarily healthy from a supply-demand balance perspective, and that helps us drive really robust financial outcomes.

Very helpful. Thank you.

Conference Operator: Thank you. Our next question comes from the line of Jim Schneider of Goldman Sachs. Please go ahead, Jim.

Good evening. Thanks for taking my question. Two quick ones. One follow-up on Joe’s question, which is, you know, just in general, given all the performance benefits you talked about relative to your position on an HBM4, would you expect your HBM4 share to be higher than it was for HBM3 in a sustainable way going forward?

Sumit Sadana, Chief Business Officer, Micron Technology: I mean, we do feel we have very strong capabilities entering the HBM4 business. We certainly believe that we have the best HBM3E product in the world with highest performance and 30% lower power consumption than any other competitor. What we did not have at the start of the HBM3E business ramp, though, is that we didn’t have that installed capacity and that base capability. We were ramping from very low levels. Now, with the very strong performance from our operations team, we have been able to get our capacity, our yields, our performance, our quality to extremely good levels. We have met our market share goal that we had articulated many quarters ago to you. We are starting off our HBM4 in a very different position in terms of being able to meet the expectations and requirements of our customers from a volume support perspective.

We feel that from a competitive positioning, that aspect of the business is in much better shape. Now, with HBM4, there has been a lot of chatter in the market and the media about what is our HBM4 performance compared to those who are doing the baseline, the foundry, etc. We just wanted to mention and lay some of those doubts to rest that we today believe that our HBM4 has the highest performance amongst any competing product out there. We don’t believe that others can match this performance with this level of capability, quality, power consumption, and so on. We believe that there’ll be tremendous customer preference for our products. Of course, we have increases in our HBM supply that we have created through our investments. We have confidence that we will sell out that supply for calendar 2026.

There may be some HBM share shifts happening on the competitive landscape, but it is our belief that most of that is most likely going to be between our two competitors rather than impacting our share in any material way.

Thank you. As a follow-up on the CAPEX side, could you maybe give us some color on the split of WFE versus facility CAPEX you saw in fiscal 2025, and whether we should expect any significant change in that mix heading into next year? Thank you.

Mark Murphy, CFO, Micron Technology: Jim, it’s Mark. We’re not going to provide that breakout, just that the vast majority of this spend is for DRAM construction and equipment.

there any significant change in the facility piece of that for next year or two?

We’re not going to comment on that. As you know, we’re expanding in a number of sites, including, we talked about our first fab in Idaho, and we’re also equipping those fabs as well.

Okay, thank you very much.

Conference Operator: Thank you.

Mark Murphy, CFO, Micron Technology: I should say equipping the fab and then also doing tech transitions.

Manish Bhatia, EVP of Global Operations, Micron Technology: You mean, sorry, just to be clear, you’re saying in Idaho, we’re in construction. We expect production there.

Mark Murphy, CFO, Micron Technology: Second half of 2027.

Manish Bhatia, EVP of Global Operations, Micron Technology: Second half of 2027. We are investing in technology transitions and optimizing, you know, production across our footprint in Japan and Taiwan, where we have available clean-up space.

Conference Operator: Thank you. Our next question comes from the line of Chris Danely of Citi. Please go ahead, Chris.

Hey, thanks, guys. Can you hear me okay?

Mark Murphy, CFO, Micron Technology: Yeah.

So far.

I’ve been having phone problems all day. Quick clarification. As far as the DRAM revs go, you guys gave us the HBM breakout. Can we assume, you know, roughly the same ratio for DDR4, roughly high single digits, and then the rest DDR5? Any commentary on the relative contributions to incremental gross margin between, say, you know, DDR5 and HBM?

Sumit Sadana, Chief Business Officer, Micron Technology: Yeah. We had said earlier to you that the DDR4 plus LP4, we had provided, you know, some guidance earlier. We are pretty close to those levels. I’m not going to say that it’s going to sustain throughout the fiscal year because, you know, the mix changes over time. DDR4, just by itself, not counting LP4, has actually been a low single-digit % of the business. It’s been relatively small. We have UL’d this. We have extended some of our UL timeline based on extreme shortages at customers. Of course, the margins have become dramatically better as this shortage has continued. I think that’s that. I think in terms of the relative margin, if I understood your question correctly, relative margin between DDR and HBM, we are not going to comment on that because while the HBM, as I mentioned earlier, you know, they run like two different business models.

While the HBM pricing is set ahead of time for the upcoming calendar year, the pricing on the rest of the DRAM portfolio and, of course, NAND portfolio also is, you know, moving around based on quarterly trends. We have mentioned to you that the DRAM industry is tight. As we get into 2026, we expect it to further tighten due to all of the robust demand that we are seeing and the limits on the supply growth caused by a number of factors that were discussed. We believe that tightening is going to enable, you know, improving pricing and margins on the non-HBM portion of the portfolio. That will move around. It’s not really practical or possible to give you sort of a relationship between the two.

Conference Operator: That’s great. That’s still super helpful. For my follow-up question for Mark on gross margins. Mark, remember we had lunch earlier this year and I asked you about, you know, could you guys get back to 50% gross margin? You said it’s possible. Who knows? Depends on a lot of things. It’s going to be tough. Here we are, and now we’re going past that. Can you just maybe talk about what changed or what was the key to that? What are the limiting factors on gross margin going forward? Is it just essentially a function of, you know, how many more quarters pricing keeps going up or is there something else going on as far as mix goes? Thanks.

Mark Murphy, CFO, Micron Technology: Chris, since through the fourth quarter, the market conditions continue to improve. As you know, we updated in mid-August the 11th, and we reported a margin 120 basis points higher than that update. Prices continue to improve. The market conditions are very good, very tight on DRAM, and they’ve improved in NAND and continue to improve. The margin we reported is now above where it was in mid-fiscal 2022, and DRAM margins are higher than that mid-2022 period. The operating margin’s the highest that it’s been since November 2018. From here, the NAND business can continue to improve. There’s been good supply response by us, and we’ve focused on higher-value SSD products in that business. While that business is below 2022 levels, it can continue to improve, and that will help overall margins. Furthermore, as we talked about, DRAM is very tight now, and incremental supply is meaningful.

Incremental supply is difficult to bring on. You have a number of factors that are structural here. Our inventory levels are low below targets. We’ve got this extended life on DDR4 LP4, which is constraining the ability to do techno transitions. You have obviously the silicon intensity of HBM as that continues to grow quickly. Incremental capacity, as you know, to bring on a fab takes a long time. For example, our new fab, Idaho, will come on in wafer production starts in meaningful wafer production starts in second half 2027. That constrained supply focus on diverting bits to the best products and also our continued good cost improvements, those all offer the ability to expand margins. We’ve indicated that we expect second quarter gross margin to be up relative to first.

Great. Thanks for your explanation, Mark.

Conference Operator: Thank you. Thank you. Our next question comes from the line of Vijay Rakesh of Mizuho. Please go ahead, Vijay.

Yeah, hi, Mark, Sumit and Manish. Just a quick question on the DRAM side. I know you mentioned one-gamma is starting now. If you look at the year, one-beta, which looks like most of the HBM4 will be on one-beta as well, any thoughts on what the mix will be for you, one-gamma versus one-beta now versus exiting the year, fiscal 2026, let’s say?

Manish Bhatia, EVP of Global Operations, Micron Technology: Yeah, sure. Thanks, Vijay. Manish, we are very pleased with one-gamma ramp. We were able to achieve both mature yield this quarter as well as first revenue shipments into hyperscaler as well as other applications. We are really, really pleased with how that ramp is going. We expect to be able to have one-gamma be the primary area that’s going to be providing us bit growth for fiscal 2026 in terms of supply. We are going to be qualifying across multiple different product areas as we go through the year. We are already at a point where the one-gamma production plus the one-beta production are the significant majority of our bit output, and that mix will continue to grow towards one-gamma as we go through fiscal year 2026.

Mark Murphy, CFO, Micron Technology: Yeah, I would just maybe add one thing. We talked quite a bit about supply constraints on the last question. A very important part of our supply solution in 2026 is this ramping of one-gamma DRAM, which, as Manish said, is going very well. Chris, just one additional note on your margin question is, you know, is this just improved mix to, in our business, the data center and the higher performance requirements of that market and the favorable effect of that on the business?

Got it. On the HBM4, given your higher speeds and lower power, I guess the die’s bigger too, in your own logic die. Would you expect the margins on HBM4 to be better versus HBM3E, I guess, equal high?

Sumit Sadana, Chief Business Officer, Micron Technology: Yeah, I mean, we are very confident in the capabilities of our product. Certainly, the HBM4 cost is higher than the HBM3 cost, and the HBM4 price will be meaningfully higher than the HBM3E price. We don’t really talk about margins by product line or, you know, within a product line, you know, which product has what kind of relative margin. Overall, for HBM, we certainly expect that we’ll have really good ROI capability for many years for the company, not just driven by the huge complexity of HBM, but also driven by the dramatic value it creates for our customers and our intent to, you know, ensure that we are benefiting from providing that value.

Got it. Thanks.

Conference Operator: Thank you. Our next question comes from the line of Aaron Rakers of Wells Fargo. Your line is open, Aaron.

Yeah, thanks for taking the question. I’ll ask two as well. I guess kind of building on some of the prior questions, I’m curious, I know, Mark, you had talked about your ability to execute, I think it was high single-digit cost down with HBM in DRAM in fiscal 2025, and then I think it was teens or something, low teens on NAND. I’m curious if, you know, as we make these process node transitions as well as G9 NAND, how do you think about the cost down curve as these process nodes materialize through this next fiscal year?

Mark Murphy, CFO, Micron Technology: Just to be clear, I think on cost downs, we gave for fiscal 2025 are slightly better than high single digits for DRAM front-end XHBM and mid-teens for NAND. I think as, and then for DRAM with HBM, down low single-digit % and NAND cost reductions, low teens. These are consistent with commentary we’ve given in the past that, you know, at that or better.

Okay. I’m curious, just structurally, the NAND market, you know, there’s a lot of discussion around these high-cap enterprise SSDs pushing 250 terabytes and plus. As we look at that market, I’m curious how you guys see the average capacity trending on these AI servers for SSDs and whether we should really be expecting that to inflect materially higher as we move through fiscal 2026 and some of these high-cap drives really, you know, hit true volume.

Sumit Sadana, Chief Business Officer, Micron Technology: Yes, I think the average capacities are going to continue to escalate rapidly. We had 60-terabyte drives and then, you know, 102-terabyte drives. We have ourselves announced at our last SMS event 122-terabyte drives, 245-terabyte drives. We are very excited with the demand that we see for these drives. We do think there will be meaningful uptake of these high-capacity drives, and they will drive the average capacities higher. I also mentioned that, you know, there is expected to be a shortage of hard drive storage for these hyperscalers. More meaningful usage of NAND even beyond previous plans should drive a positive outcome here as well as an added tailwind.

Where do you think the average capacity is today per server? Just curious.

It’s moving around quite a bit because in any given quarter, the mix of general-purpose servers and AI servers keeps changing. AI servers generally tend to use the highest capacity that is available in very meaningful quantities. AI servers are focused on just ensuring a huge amount of capacity. With different workloads of inference that are also increasing, more fragmentation is happening in the configurations that are getting shipped. Generally speaking, the highest capacity drives that the industry has been able to produce do get used by AI servers. They are going from 100, they’re going from 60 terabytes to 120 and actively using a lot of 245 going forward.

Thank you.

Welcome.

Conference Operator: Thank you. Our next question comes from the line of Brian Chin of Stifel. Please go ahead, Brian.

Manish Bhatia, EVP of Global Operations, Micron Technology: Hi there. Thanks for letting us ask a few questions. Maybe I know there’s a couple of questions on cost down or cost reduction, but I was just curious. You’ve obviously talked about in the past HBM3E, some efficiencies you’ve gained as you’ve kind of moved into relative maturity from where you started. I know you don’t want to provide too much detail around pricing in 2026 for 3E. While your tone does suggest you should have sufficient leverage, I guess, in terms of those negotiations. I’m wondering, is there more efficiency in terms of an improvement in assembly and packaging yields for 3E that maybe could also help you out a little bit in terms of margin profile next year? Thanks, Brian. We are very happy with how the HBM3E 12-high ramp has gone.

We talked about being able to get our yields to maturity on 12-high significantly faster than we did on 8-high, which was really our first major HBM volume node. We’ve now gotten production capacity up to meaningful volumes as we kind of gave you. There will be continued opportunity, but I would say that really the biggest part of that benefit in ramp has happened as we’ve gone through the 12-high over the last couple of quarters. Got it. I appreciate that. Maybe a quick follow-up. I know there’s been some discussion here about your guys re-attaining this 50%+ blended gross margin, first time since the 2017, 2018 timeframe. I know you wouldn’t recast or you can’t recast cloud and core enterprise server revenue back that far. You did give us the sequential and the year-over-year compare today. Those segments are roughly mid-50% of sales now.

What roughly did they represent back then? Clearly, it must have been a much smaller proportion. That’s obviously a structural shift in the business period to period.

Sumit Sadana, Chief Business Officer, Micron Technology: Yeah, I mean, without giving you specifics for any one particular timeline, I’ll just mention to you that most segments that are part of the TAM over the different time horizons in the past prior to generative AI coming on the scene had peaked around a third of the overall market in terms of segment size, right? If you think about the data center segment or you think about the mobile segment, when they would go into this big spurt, it would peak around, roughly speaking, give or take, a third of the overall market. This time around, of course, that pseudo ceiling of a third is no longer in place because the data center has become more than half and continues to outgrow the rest of the market at very robust profitability levels. We do think that AI has radically changed the landscape.

Not only is the mix due to AI growth in the data center caused the data center to become a much larger part of the TAM, but it is also a higher value as well as a higher margin opportunity. We did mention that HBM and high-capacity DIMMs and the LP that goes into the data center, these three categories alone were $10 billion in fiscal 2025, so a very large part of our fiscal 2025 revenue. These are all high-value-add portions of the portfolio. This doesn’t even account for regular DDR5 that is in 64GB and below type of DIMMs that are going into the data center. It doesn’t account for data center SSDs that are part of the data center portfolio. There is a lot of that shift that is going on, but it’s also a shift that has a lot of legs to continue.

That’s also the demand coming from the data center that’s creating a lot of this tightness in the industry and causing pricing to and enabling us to be able to increase pricing across all of the segments of the market, not just the data center. It’s helping the profitability of the entire portfolio of the company, even though it’s driven largely from the data center.

Manish Bhatia, EVP of Global Operations, Micron Technology: Great. Appreciate that.

Conference Operator: Thank you. Our next question comes from the line of Quinn Bolton of Needham & Company. Please go ahead, Quinn.

Hey, Mark. Maybe I just missed your answer. I just want to clarify your answer to Aaron’s question on the cost downs. You did low single digits in DRAM, inclusive of HBM, and low teens in NAND. Did you say that those are good ranges to think about in 2026, or did you not give a cost down target for fiscal 2026?

Mark Murphy, CFO, Micron Technology: We just gave 25.

Okay. Thank you for that clarification. I guess maybe just kind of a bigger picture question. As you look at the inferencing market, NVIDIA recently introduced their CPX GPU that uses GDDR7 instead of HBM memory. To the extent that that architecture takes off, do you think that that lower HBM content on inferencing platforms would have any impact on your broader outlook for the HBM market over the next few years, or do you think that the CPX architecture represents sort of only a small portion of the inference market?

Sumit Sadana, Chief Business Officer, Micron Technology: Yeah, as the AI market continues to grow and evolve, it is for sure going to have a lot of different use cases come up, a lot of different types of workloads for which optimized architectures would have to be evolved. This is just another step in that direction. The AI market is going to become very, very big over time, and it is going to have needs that are not going to be one size fits all. That optimization will be necessary to scale out the capabilities in a cost-effective way. Certainly, this is just one example. There will be more in the future. One important thing to keep in mind as all of this happens is that a lot of the inference workloads tend to be memory-bound workloads.

Consequently, as inference becomes a larger and larger part of the AI market and over time will likely become, you know, 80% of the AI market over the years, a lot of that being memory-bound means customers will be looking for different architectures that increase memory capacity and memory bandwidth. Depending on the latency requirements and time-to-first token and those types of different KPIs that these architectures have to hit, different types of solutions will be appropriate for various workloads. We are having a strategy to ensure that we are very strong in HBM, as we have discussed at length. We have an industry-leading product with our GDDR7.

We are the pioneers of LPDRAM in the data center, which is going to be used more and more over time, not just because of its energy efficiency, but because, you know, more industry players are going to, from an ecosystem perspective, from a CPU enablement perspective, going to start supporting LP over time. All of these capabilities that we have developed that are industry-leading will serve us really well. Our intent is to create those high-value solutions across the rich frontier of evolving architectures that our customers will be driving.

Excellent. Thank you.

Conference Operator: Thank you. Our next question comes from the line of John Vinh of KeyBank. Please go ahead, John.

Great. Thanks for taking my question. I just had a couple of follow-ups. First on HBM, Sanjay on the call really went out of his way to kind of say, "Hey, we can support 2.8 terabytes per second and 11 gigabits per second." It seems like these performance specs are greater than the original JEDEC standards that were set. It looks like customers are asking for more. I’m just curious, why are customers increasing kind of the original specifications for HBM4 and asking for higher performance? Just a quick housekeeping question from Mark. Just looking at your guidance, given the midpoint of all the ranges that you provided, it looks like to get to $3.75 in EPS, it implies that interest income is positive in the quarter. Is that the case of what’s implied there?

Sumit Sadana, Chief Business Officer, Micron Technology: I’ll just answer the first part of your question and then hand it over to Mark. In terms of the HBM4 specs and its evolution, no doubt that the JEDEC specs were definitely exceeded by a significant margin by some of the numbers that we have quoted to you today, with greater than 11 gigabits per second pin speed and 2.8 terabytes per second of bandwidth. We have sampled these products. Customers, obviously, are looking for as much improvement as they can get in the ROI that they can offer to their end customers. That typically means that if there is a way to really drive higher bandwidth, you can increase the tokens, you can reduce the time-to-first token, you can get to a lower cost per token kind of a metric, and that becomes a more attractive solution for their end customers. That’s really what is happening.

Certainly, the HBM4 specs that we have been able to produce will create a new bar for performance that would be needed to really enable these types of high-performing systems. That’s really what has happened on that front. I’ll pass it on to Mark to talk about the second part of your question.

Mark Murphy, CFO, Micron Technology: Yeah, John, we do expect that interest to flip to income. We have greater capitalized interest, lower debt, and higher cash balances. All those will flip that line.

Great. Thank you.

Conference Operator: Thank you. Our next question comes from the line of Kevin Cassidy of Rosenblatt Securities. Please go ahead, Kevin.

Yes, thanks for taking my question. You know, with the supply-demand going favoring the demand side, is there any discussions yet for, you know, long-term agreements with all of your clients or your customers?

Sumit Sadana, Chief Business Officer, Micron Technology: Yes, there is certainly interest in some of these agreements. We have certainly experimented with different types of long-term agreements in the past and innovated with some ideas on how to do some of these things. I do think that we are going to be very thoughtful about what we do here and what term and lifetime of these agreements we sign up for. We also have U.S. manufacturing that we are going to be bringing online. We also have changes that are likely to happen on the landscape due to tariffs, and we’ll have to respond to that when they are announced, Section 232 Semiconductor Tariffs. There are all kinds of reasons to be thoughtful about what happens to pricing, what happens to how we create value for customers, whether it is through U.S. manufacturing or product capabilities.

There is also, obviously, this very significant shift towards data center that I had been describing, and you have been watching that’s been happening in the mix of the overall industry as well as for Micron Technology. We are being thoughtful about all of these different factors, and we will definitely be leveraging these in the discussions with customers. What that comes out on the other end of these, I would rather not speculate at this time.

Conference Operator: Yes, understood. Maybe just a question on your decision to drop the managed NAND for the smartphone market. Is there a lower-cost supplier out there, a new supplier that is taking that type of business?

Sumit Sadana, Chief Business Officer, Micron Technology: It is not about a lower-cost supplier. It is just about, you know, for us, the ROI in the business. The NAND business ROI certainly has been for the past several years lower than that of DRAM. Our approach has been that as we have strengthened our portfolio in NAND, particularly with the growth of our data center SSD business, we wanted to leverage that to improve the overall portfolio mix. We determined that the pricing expectations and the level of competitiveness in the mobile NAND market did not lend itself for robust ROI over time. We determined that it was better to exit that and concentrate our resources in other places where we can drive better ROI. One of the things that you have seen us do over time is, you know, dramatically improve our product portfolio.

As our portfolio has improved, it has given us the flexibility that we are now leveraging to mix into those parts of the portfolio which offer the highest profitability so we can have a bigger share of the industry’s profit pool. That has been our strategy now. We can drive it more aggressively with the improved portfolio that we now have. We have been investing to get these capabilities for several years now, and we are in a good place to be able to leverage it now.

Mark Murphy, CFO, Micron Technology: To add, to build on Sumit’s comments, we don’t report or operate the business by technology, but we do view that we’ve completed a second year of positive free cash flow in NAND.

Conference Operator: Okay, great. If I’m allowed to ask one more on that, just your smartphone customers didn’t have a problem with that, but you know, doesn’t affect your DRAM sales to them?

Sumit Sadana, Chief Business Officer, Micron Technology: No, I mean, customers are never happy when one important supplier is leaving a segment. I wouldn’t say that they’re happy to see us exit that, but we have a very strong relationship with all of these customers, and the DRAM business is super critical to them, and they have far fewer choices on the DRAM side compared to what they do on the NAND side. We have worked with them to transition their products to other suppliers. We have supported them through that transition on the NAND side, and we continue to remain very robust suppliers to them on the DRAM side.

Conference Operator: Okay, great. Thank you.

Sumit Sadana, Chief Business Officer, Micron Technology: Welcome.

Conference Operator: Thank you. That is all the time we have for our Q&A session. This concludes today’s conference call. Thank you for participating. You may now disconnect.

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