Micron's Supply Crunch Fuels Record Forecasts Amid AI Boom

Micron posts historic revenue & EPS, forecasts massive Q3 growth. AI-driven chip shortage persists until 2028, fueling pricing power. New HBM4 production begins, fully sold through 2026.

Micron Technology finds itself in an enviable yet challenging position: demand for its memory chips is so immense that it cannot fully meet customer needs, a scenario underpinning staggering financial projections. Despite posting historic quarterly results, the company's shares experienced a pullback, interpreted by some market observers as profit-taking following a significant rally.

Unprecedented Financial Performance and Guidance

For its fiscal second quarter ending in February, Micron reported revenue soaring to $23.9 billion, a staggering 196% year-over-year increase. Adjusted earnings per share reached $12.20, up 155% from the prior year. The outlook for the current quarter is even more striking. Management forecasts revenue of approximately $33.5 billion, which would more than triple the $9.3 billion recorded in the same period last year. The projected gross margin is near 81%, with earnings per share expected to hit $19.15.

Hendi Susanto, a portfolio manager at Gabelli Funds, noted that this guidance substantially exceeded both his own estimates and consensus analyst expectations. In conjunction with these results, Micron announced a 30% increase in its quarterly dividend to $0.15 per share, payable on April 15.

Structural Supply Shortage Defines the Market

Behind these record numbers lies a fundamental industry dynamic. CEO Sanjay Mehrotra revealed that Micron can currently supply only between 50% and 67% of the demand from its key customers. This supply-demand imbalance spans both DRAM and NAND memory, driven overwhelmingly by artificial intelligence servers and traditional data center infrastructure.

Significant new industry capacity is not expected to come online until 2027 at the earliest, with meaningful relief unlikely before 2028. This prolonged shortage grants Micron considerable pricing power in a booming market. The company plans capital expenditures exceeding $25 billion for the current fiscal year, with a further substantial increase—including over $10 billion in construction costs alone—anticipated for 2027.

HBM4 Production Ramps for Next-Gen AI Platforms

A key technological milestone was achieved this week with the start of volume production for Micron's next-generation high-bandwidth memory (HBM). The new HBM4 product, a 36-gigabyte, 12-layer stack designed for NVIDIA's upcoming Vera Rubin platform, features pin speeds exceeding 11 Gb/s and a bandwidth of over 2.8 TB/s. This represents a 2.3x performance increase over the prior HBM3E generation while improving energy efficiency by more than 20%.

Furthermore, the company has already shipped samples of an even more advanced 48-gigabyte, 16-layer variant to customers, offering 33% greater capacity per module. Demand is so robust that Micron's entire HBM production for calendar year 2026 is already fully allocated under supply agreements. Notably, the company has also secured its first-ever five-year strategic customer contract, ensuring long-term volume and supply commitments.

Market Reaction and Positioning

Despite the exceptional financial and operational updates, Micron's stock price retreated following the announcement. Analysts at Citi interpreted the move as a natural consolidation after a powerful rally and maintained their buy rating on the shares. According to the company, Micron stands as the only one among the ten most valuable U.S. technology firms to have posted share price gains year-to-date.

The next quarterly earnings report is scheduled for July 1, 2026.