Most people will never knowingly buy a Micron product. But if you use a smartphone, open a laptop, drive a newer car, or ask an AI model a question, you rely on the kind of memory and storage Micron makes.

For years, that made Micron important but mostly invisible. The world now sees it very differently. Since the start of 2025, Micron shares have climbed more than 1,000%, turning the company into a $1.2T business. This year alone, Micron has accounted for 12% of the S&P 500’s entire gain, making it the index’s second-largest contributor behind Nvidia.

The reason is straightforward. AI needs enormous amounts of memory and demand has outrun supply. Micron just earned nearly $85B in profit in a single year, more than names like Meta, JPMorgan Chase, Exxon Mobil, or Visa.

So that leaves us with a simple but consequential question:

Is this another cycle that will eventually implode, or just the start of the biggest memory boom in history?

Disclaimer: This is not financial or investment advice. I'm sharing my personal investment decisions and reasoning for educational and informational purposes. Always do your own research before making any investment decisions.

Micron is one of the world’s largest memory and storage companies, producing DRAM and NAND used across data centers, PCs, smartphones, and other computing markets. Q4 was another exceptional quarter, with revenue, gross margin, and earnings all reaching record levels as tight supply and AI-driven demand continued to support higher memory pricing.

Quarter at a Glance

What Mattered

1/ Supply Gets Tighter

Micron was already operating in a tight memory market heading into Q4, but management’s outlook strengthened again. The company now expects DRAM and NAND supply-demand conditions to be tighter in calendar 2027 and 2028 than they were in 2026, and said it currently has no line of sight to when DRAM supply will catch up with demand. More than 75% of Micron’s 2027 output is already committed across both long-term supply agreements and regular customer orders, while most current customer discussions have shifted toward 2028 supply.

That stronger supply-demand outlook is clearly reflected in management’s FY2027 expectations. Micron expects another record year with sequential revenue growth in every quarter, while Q1 is expected to be the low point for gross margins for the year.

The constraint is largely on the supply side. Micron is increasing FY2027 capital spending, but new capacity takes years to build and then additional time to ramp. Idaho’s first new fab is expected to begin wafer output in mid-2027, while other major expansions in Idaho, Japan, and Singapore are not expected to begin output until 2028 or later. Management said most of the incremental construction spending is intended to accelerate additional cleanroom availability beginning in late 2028.

2/ Locking In Demand

Micron’s long-term supply agreements expanded meaningfully again this quarter. The company now has 26 strategic customer agreements, up from 16 last quarter. Management estimates they will account for more than 35% of revenue through 2030, compared with roughly 25% previously. All of the agreements include take-or-pay volume commitments, meaning customers are committing to purchase agreed amounts of supply over multiple years.

Customers are also looking further out for supply assurance. Some agreements now extend into 2031, while customers are already seeking coverage beyond 2030. Micron still believes SCA coverage could eventually reach around 50% of revenue through 2030, but management also wants to preserve flexibility to serve different customers and end markets as the industry evolves.

While the volumes are committed, pricing is not structured the same way across every contract. Roughly three-quarters of the expected SCA revenue has a defined pricing framework, with most of that subject to floor and ceiling prices. The remaining quarter is periodically repriced based on market conditions. Micron said new SCA discussions involving pricing are being negotiated at higher levels given the current market environment.

Those commitments are also becoming increasingly tangible financially. Customer commitments tied to the agreements have risen to $32B, the vast majority in cash deposits, while Micron now reports roughly $150B of remaining performance obligations from contracts with defined pricing frameworks. That $150B is based on committed volumes and minimum pricing, so management expects actual revenue from those agreements to exceed the reported amount over their lives.

3/ HBM Economics Improve

Micron’s high-bandwidth memory (HBM) business continued to scale quickly in Q4. HBM is a specialized form of DRAM used in AI systems to move large amounts of data at very high speeds. HBM revenue grew faster than Micron’s overall revenue as shipments expanded across more customers. The company has also completed agreements for the vast majority of its calendar 2027 HBM supply at significantly higher prices YoY.

One of the bigger concerns coming into the quarter was profitability. Despite being one of Micron’s newer and most important AI products, HBM has still carried lower gross margins than conventional DRAM. That showed up again in Q4, with Cloud Memory gross margin holding at 83% as higher pricing was offset by a greater HBM mix. However, management now expects the significantly higher prices negotiated for 2027 HBM supply to narrow that margin gap, improving the economics as the business continues to scale.

AI demand is also showing up outside of HBM and DRAM more broadly. On the NAND side, which is used primarily for storage products such as SSDs, data center SSD revenue approached $10B in Q4, more than 10x the year-ago quarter and more than two-thirds of Micron’s total NAND revenue. Micron said demand is being supported by AI context storage and hard-disk-drive replacement opportunities in data centers.