Micron signs long-term deals with Qualcomm, Harman, others for AI vehicle memory chips

Goldman Sachs strategist Ben Snider says the AI stock rally hinges on hyperscalers like Oracle and Amazon delivering another quarter of accelerating cloud computing adoption this earnings season. In a new note, Snider said Goldman's equity analysts expect year over year cloud revenue growth to increase from 48% in Q2 to 55% in Q3, after last quarter's accelerating cloud revenue growth and large revenue backlogs signaled monetization of capex investments. Micron offered an early validating sign last week, beating sales and profit forecasts for the quarter on voracious AI-driven demand, with guidance also strong; the memory chipmaker added about $43 billion in sales in the most recent quarter compared to the year-ago quarter, and operating margins exploded in all business segments. Executives told analysts on the earnings call that high chip prices and tight capacity would be the name of the game through 2028. D.A. Davidson analyst Gil Luria said expectations for tightening supply-demand conditions through both 2027 and 2028 meaningfully extend the industry's runway for strong pricing and earnings growth, addressing a key investor concern that current fundamentals represent a cyclical peak.

Micron reported fiscal Q4 revenue of $54.23 billion, up from $11.32 billion a year earlier, with non-GAAP earnings of $33.42 a share and non-GAAP gross margin of 87.0% versus 45.7% a year earlier. The company's Core Data Center unit generated $18.00 billion of revenue at a 90% gross margin, compared with $1.58 billion a year ago, and Micron is the only U.S.-based maker of high-bandwidth memory, working with Nvidia on the first custom HBM design. Micron has signed Strategic Customer Agreements, and noncurrent customer contract liabilities rose to $12.9 billion from $568 million a quarter earlier, while customer deposits brought in $12.75 billion during fiscal 2026. Fiscal 2026 operating cash flow was $89.68 billion and adjusted free cash flow was $62.31 billion, with fiscal Q1 2027 guidance calling for $61.5 billion of revenue plus or minus $1.5 billion and $38.15 of non-GAAP EPS plus or minus $1. Micron spent $27.37 billion net on capital projects in fiscal 2026, up from $13.80 billion in fiscal 2025, and at about 6 times expected earnings the stock trades far below its five-year average P/E of 74.27, with 184 hedge funds holding the stock in the most recent quarter, up from 154.

Micron Technology reported fiscal fourth-quarter non-GAAP earnings of $33.42 per share on September 30, with quarterly revenue of $54.23 billion and operating cash flow of $43.97 billion, ending the year with $73.48 billion in cash and investments. Data center core revenue climbed to $18.00 billion from $11.52 billion in the prior quarter as AI buildouts widened, and management said agentic AI is pushing server unit growth into the high teens. The company has signed 26 strategic customer agreements covering roughly 35% of its production through 2030, with more than 75% of fiscal 2027 shipments already committed, and it raised HBM prices significantly for calendar 2027 while guiding next quarter's gross margin to about 86.3%. Capital spending reached $27.37 billion this fiscal year, most of the increase going into clean rooms in Idaho and Singapore that will not produce bits until late 2028, and about three-quarters of agreement revenue carries a defined pricing framework with floors and ceilings. Bit shipments in mobile and client fell for a second straight quarter, research spending is set to rise by more than $1 billion in fiscal 2027, and the stock trades at a forward P/E of 7.02 as of October 2, with 184 hedge funds holding it in the most recent quarter, up from 154, and short interest at just 2.45% of float.

Micron beat sales and profit forecasts for its latest quarter, driven by voracious demand from the AI boom, with guidance also strong except for margin comments on the earnings call that may have caused a muted market reaction. The memory chipmaker added about $43 billion in sales during the most recent quarter compared to the year-ago quarter, and more than $13 billion in sales from the quarter reported three months ago. Operating margins exploded in all business segments, exceeding 80% in some segments. Micron executives signaled tight capacity and higher prices for its products until 2028, with D.A. Davidson analyst Gil Luria saying expectations for tightening supply-demand conditions through both 2027 and 2028 meaningfully extend the industry's runway for strong pricing and earnings growth. The stock trades on a single-digit forward P/E ratio.

Micron CEO Sanjay Mehrotra said on the company's Q4 earnings call that physical AI, starting with self-driving cars and expanding to humanoid robots, could become a significant driver of memory and storage demand by the end of this decade. In its Q4 report on Wednesday, Micron reported earnings per share of $33.42, up 1,002% from $3.03 in the same quarter last year, while revenue climbed 379% to $54.23 billion from $11.31 billion in Q4 2025. Mehrotra said memory content in level 4 and higher autonomous vehicles typically exceeds 200 gigabytes, with storage reaching multiple terabytes, each more than an order of magnitude greater than in today's level two plus and level three semi-autonomous vehicles. He added that humanoid robots will have similar memory and storage requirements, which could serve as an additional revenue opportunity. Companies working on humanoid robots include Tesla, Figure, Hyundai's Boston Dynamics, Unitree Robotics, and Agility Robotics, though Reuters reported only 7,000 humanoid robots were sold globally in 2025 for industrial and professional services.