Micron Q3: $41.5B Revenue, $100B in AI Memory Deals
Micron's record Q3 brought $41.5B revenue and 84.9% margins, plus 16 take-or-pay deals worth roughly $100B designed to break the memory cycle. Stock up 14%.
A record quarter, and a bigger structural claim
Micron delivered fiscal third-quarter revenue of $41.46 billion, more than quadrupling the $9.30 billion it booked a year ago and clearing the roughly $35.25 billion consensus. Non-GAAP EPS landed at $25.11 against $20.28 expected, on a record 84.9% gross margin. The stock ripped about 14% after hours to near $1,190, stretching a year-to-date gain close to 325%.
The contracts are the real story
Beneath the headline numbers sit 16 Strategic Customer Agreements — take-or-pay deals in which four large and three mid-sized customers commit to buy fixed volumes regardless of where spot prices go. Fourteen of them carry roughly $100 billion in minimum contracted revenue through 2030, plus $22 billion in upfront cash deposits.
The mechanism that matters: pricing floors set to guarantee gross margins above any level Micron has hit in any prior cycle. For three decades the DRAM business has run the same loop — build capacity into a boom, flood the market, watch prices collapse. These contracts are an explicit attempt to engineer that downturn out before it arrives.
AI is doing the heavy lifting
All four units printed records, led by the data center. The core data-center unit, home to high-bandwidth memory for AI accelerators, did $11.52 billion at an 87% margin; cloud memory added $13.77 billion. Combined data-center revenue is now running above a $100 billion annual rate. Micron's HBM4 is already shipping into Nvidia's Vera Rubin platform, and CEO Sanjay Mehrotra warned supply won't catch demand until fiscal 2028 at the earliest.
How desks should read it
Bulls see a regime change: TD Cowen's Krish Sankar lifted his target to $1,500 from $660, arguing memory's role in AI is structural, not cyclical. Skeptics counter that today's capex is tomorrow's glut, with TechInsights flagging a 2027 downturn. The guidance does the bulls no harm — Q4 revenue is pegged at $50 billion and EPS at $31, both well above the Street. For anyone trading the AI capex theme, Micron just handed over the cleanest evidence yet that hyperscalers will pay for supply security over cheap pricing.