---
title: "AI drives a storage boom, Micron's revenue nearly doubled last quarter, and this quarter's guidance greatly exceeded expectations, with fiscal year spending expected to surge | Earnings Report Insights"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/279684853.md"
description: "Micron announced that its gross margin for the second fiscal quarter approached 75%, with revenue and EPS both hitting record highs for a single quarter; the quarterly dividend was increased by 30%. The midpoint of the revenue guidance for the third fiscal quarter is more than 50% higher than analysts' expectations, and the EPS guidance is nearly 70% above expectations, with a gross margin expected to be 81%; the capital expenditure guidance for this fiscal year has been raised by 25% to $25 billion, and expenditures for the next fiscal year are expected to increase by more than $10 billion compared to this fiscal year. The stock price initially rose over 2% in after-hours trading but later fell by 6%"
datetime: "2026-03-18T23:31:24.000Z"
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  - [zh-HK](https://longbridge.com/zh-HK/news/279684853.md)
---

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# AI drives a storage boom, Micron's revenue nearly doubled last quarter, and this quarter's guidance greatly exceeded expectations, with fiscal year spending expected to surge | Earnings Report Insights

Against the backdrop of AI demand continuously driving up storage prices, Micron Technology delivered a financial report that far exceeded expectations and provided an extremely strong future outlook, highlighting that the industry's prosperity driven by AI is still accelerating. However, capital expenditures for this fiscal year and the next are expected to surge, leading investors to adopt a cautious attitude towards Micron's profit prospects.

On Wednesday, the 18th of Eastern Time, Micron announced that for the second fiscal quarter of 2026, ending February 26, revenue increased nearly twofold year-on-year to approximately $23.9 billion, with a non-GAAP adjusted earnings per share (EPS) of $12.20, significantly higher than market expectations. Micron stated that this quarter set records for revenue, gross margin, EPS, and free cash flow across multiple metrics.

Micron's profitability has risen even more significantly. The non-GAAP gross margin for the second quarter rose to 74.9%, continuing to leap from 56.8% in the first quarter and far exceeding 37.9% in the same period last year; the non-GAAP operating profit margin further increased to 69.0%. In an environment of "strong demand + tight industry supply," the combination of price and product mix, along with the release of operational leverage, has driven a profit explosion.

In terms of business structure, the growth engines targeting AI computing power and data centers are clearer. In the second quarter, cloud storage revenue was $7.75 billion, and core data center revenue was $5.69 billion; at the same time, mobile and client, automotive and embedded segments also strengthened, with all four business lines maintaining high gross margin levels.

What surprised the market even more was Micron's strong guidance. Micron expects a median revenue of $33.5 billion for the third quarter, which is more than 41% higher than the analyst consensus estimate of approximately $23.7 billion; the median non-GAAP EPS for the third quarter is expected to be $19.15, nearly 70% higher than the analyst estimate of $11.29.

Regarding shareholder returns, Micron maintains a stable dividend policy, strengthening investor returns against the backdrop of explosive performance and improved cash flow. The company's board of directors approved a 30% increase in the quarterly dividend to $0.15 per share.

Boosted by strong performance and guidance, Micron's stock price, which had nearly closed flat on Wednesday, quickly surged in after-hours trading, rising over 2% at one point, but then turned to decline, with after-hours losses reaching as much as 6%.

Analysts believe that Micron's stock price has already risen significantly this year, with some positive news being priced in early, and the market has high expectations for AI storage prosperity, all of which are pressuring the stock price. Additionally, Micron has raised its capital expenditure guidance for this fiscal year, i.e., fiscal year 2026, by 25% to $25 billion and expects expenditures to "significantly" increase in the next fiscal year, with an increase of over $10 billion compared to this fiscal year's expenditures, which may raise some concerns about profitability. The market is more focused on the actual order situation for the next-generation HBM products rather than just short-term financial performance

## Last Quarter's Revenue Soars Sequentially, Gross Margin Approaches 75%, Profits Set New Records Across the Board

In the second fiscal quarter, Micron achieved revenue of $23.86 billion, a significant increase of approximately 75% compared to the previous fiscal quarter's $13.64 billion, and a year-over-year growth of about 196% compared to $8.05 billion in the same period last fiscal year. While revenue surged, costs did not expand concurrently: this quarter's GAAP sales cost was $6.11 billion, driving gross profit to $17.76 billion.

The changes in the income statement exhibit more "cyclical upturn" characteristics:

-   GAAP net profit was $13.79 billion, corresponding to a diluted EPS of $12.07; non-GAAP net profit was $14.02 billion, corresponding to an adjusted EPS of $12.20;
-   Non-GAAP gross margin was 74.9%, significantly up from 56.8% in the previous fiscal quarter;
-   Non-GAAP operating profit was $16.46 billion, with an operating profit margin of 69.0%.

Cost control has led to significant operational leverage. In the second fiscal quarter, GAAP operating expenses were $1.62 billion, while non-GAAP operating expenses were $1.42 billion. With a substantial increase in revenue, the expense ratio was further diluted, providing support for the rise in profit margins.

## Data Centers and Cloud Remain the "Main Engines" AI Demand Ignites Storage Prices, Performance "Volume and Price Rise Together"

From the business composition perspective, Micron's growth this quarter was not a single-point breakthrough but a broad-based strength:

-   Cloud Storage: Revenue of $7.749 billion, gross margin of 74%, operating profit margin of 66%.
-   Core Data Center: Revenue of $5.687 billion, gross margin of 74%, operating profit margin of 67%.
-   Mobile and Client: Revenue of $7.711 billion, gross margin of 79%, operating profit margin of 76%.
-   Automotive and Embedded: Revenue of $2.708 billion, gross margin of 68%, operating profit margin of 62%.

Among these, the combined revenue from Cloud Storage and Core Data Center was approximately $13.44 billion, accounting for more than half of total revenue.

Under the management's statement that "memory becomes a strategic asset for customers in the AI era," the market tends to interpret this round of prosperity as: structural demand driven by AI-related computing power investments, combined with industry supply discipline, collectively boosting prices, utilization rates, and product mix.

The core driving force behind Micron's performance explosion this round comes from AI. As data center construction reaches its peak, the demand for high-performance storage, especially high-bandwidth memory (HBM), has surged sharply, directly pushing up storage chip prices.

Media reports indicate that memory prices have significantly increased, with some products even experiencing temporary shortages. Micron has clearly benefited in this cycle:

-   Surge in data center demand
    
-   Increased proportion of high-end products like HBM
    
-   Supply shifting towards high-margin products
    

This combination of "structural supply contraction + AI demand explosion" has enabled the company to achieve a simultaneous leap in revenue and profit.

## Cash Flow and Balance Sheet: Strong cash generation coupled with expansion investments, net cash strength remains ample

In the second fiscal quarter, operating cash flow reached $11.9 billion, higher than the previous quarter's $8.41 billion and last year's $3.94 billion.

Micron disclosed that net capital expenditures in the second fiscal quarter were approximately $5.0 billion, corresponding to adjusted free cash flow (Adjusted FCF) of $6.9 billion, which also showed a significant increase (previous quarter $3.91 billion, last year $0.86 billion).

On the balance sheet, Micron ended the period with cash and cash equivalents of $13.91 billion and held a certain scale of short-term and long-term marketable investments; at the same time, it continued to reduce leverage, with long-term debt decreasing from $11.19 billion in the previous quarter to $9.56 billion.

It is worth noting that the rapid revenue growth has led to an increase in receivables, with ending receivables at $17.31 billion, significantly up from $10.18 billion in the previous quarter, creating some fluctuations in operating cash flow due to working capital, but this is manageable given the "high base" of profit and cash flow.

Regarding Micron's announcement of a substantial increase in quarterly dividends, analysts believe that, combined with the earnings and cash flow released over the past two quarters, this move not only rewards shareholders but also reinforces the company's judgment on the demand environment and profit resilience: while continuing to invest in manufacturing capacity and maintaining high capital expenditure intensity, it still has the ability to increase cash dividends and advance debt repayment and buyback plans.

## Guidance Exceeds Expectations, Industry Prosperity Still in Upward Cycle

Compared to the already impressive quarterly performance, what has shocked the market even more is the guidance Micron provided for the next quarter.

Micron's outlook for the third fiscal quarter is undoubtedly the highlight of this earnings report:

-   Revenue: $33.5 billion, with a fluctuation of $750 million;
-   Gross margin: approximately 81%;
-   Non-GAAP operating expenses: approximately $1.4 billion;
-   Non-GAAP EPS: $19.15, with a fluctuation of $0.40.

Compared to market expectations, both revenue and profit guidance show significant upward revision potential, and the gross margin target further aims above 80%, indicating the company's judgment that "price/product mix + tight supply and demand + scale effects" will continue for at least one more quarter.

Micron's management clearly stated in the press release that they expect to see "significant records" again in the third fiscal quarter of 2026.

The revenue guidance for the third fiscal quarter is not only far above analysts' consensus expectations but also indicates that the company's revenue will continue to accelerate. This suggests that AI server demand is still rapidly expanding; the tight storage supply and demand situation is unlikely to ease in the short term;The upward price trend in the industry continues.

It is widely believed in the industry that the duration of this storage cycle may far exceed previous ones, potentially lasting for several years. Some industry insiders expect that supply tightness may persist for 4-5 years.

## Why did the stock price rise and then fall?

Although Micron's financial report performance and guidance exceeded expectations, the stock price failed to maintain its upward momentum after hours. Analysts believe that the decline in stock price indicates that the market is beginning to digest the more "expensive" side.

Firstly, Micron's stock price has already risen over 60% this year, and expectations were already high before the earnings report; any detail that is not "explosive enough" is likely to trigger profit-taking.

Secondly, Micron raised its capital expenditure expectation for fiscal year 2026 from $20 billion to $25 billion, and also indicated that capital expenditures for fiscal year 2027 would "significantly" increase, which may raise concerns among some investors that while AI demand is strong, short-term free cash flow and profit margins may not explode in sync with revenue.

Another external factor is that on the day the earnings report was released, the overall market environment this Wednesday was not friendly. The Federal Reserve announced after the meeting that it would maintain interest rates, expecting only one rate cut this year; meanwhile, U.S. PPI data exceeded expectations, raising yields and putting pressure on risk assets. In this macro context, even if semiconductor stocks report good earnings, they are more likely to exhibit a "rise and then fall" trend after hours.

From the perspective of market dynamics, the rise and fall trend is actually quite typical: the first phase trades on "earnings and guidance exceeding expectations"; the second phase trades on "high expectations, high increases, increased capital expenditures, and weak macro risk." Therefore, the stock price performance indicates that Micron's earnings report is strong enough to excite the market first and then make it cautious

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