Micron Technology (מיקרון)
Analytical review · Annual report for the fiscal year ended September 3, 2026 (fiscal 2026)
Bakshi Finance — Family Office | Research Depth: Comprehensive
What this review is based on. Micron's Form 10-K for the fiscal year ended September 3, 2026, filed October 9, 2026; the Q4 earnings release of September 30, 2026; the Q3 Form 10-Q; and Form 8-K filings on management appointments and a debt tender offer. Micron's fiscal year ends on the Thursday closest to August 31. Fiscal 2026 had 53 weeks, and Q4 had 14 weeks. Market data: closing price on Oct 9, 2026; Bank of Israel representative USD rate for the same day.
Company Profile
Micron Technology (מיקרון) makes memory and storage chips. Most revenue comes from working memory (DRAM), including high-bandwidth memory for AI servers (HBM); the rest is mainly storage memory (NAND) and SSDs. The company is headquartered in Boise, Idaho, and has about 61,000 employees. Its fabs are in Taiwan, Singapore, Japan, the U.S., Malaysia, China and India.
Fiscal 2026 revenue was $133.2 billion: 75.6% DRAM and 23.9% NAND. The company reports four business units: cloud memory (hyperscalers and HBM), core data center, mobile and client, and automotive and embedded. No customer reached 10% of revenue in the year, and the top ten customers were about half of it. Main competitors named in the filing: Samsung, SK hynix, Kioxia, Sandisk, and China's CXMT and YMTC.
Micron has no controlling shareholder. Sanjay Mehrotra is Chairman and CEO. In August 2026 two presidents were appointed: Manish Bhatia as President and COO, responsible for operating P&L, pricing and capital investment, and Scott DeBoer as President and Chief Technology and Products Officer. In December 2025 the company announced its exit from the Crucial consumer brand business.
Financial Performance
The year: price, not volume
Revenue rose 256%. Per the filing, DRAM sales rose 252%, primarily on an approximate 180% increase in average selling prices, while bit shipments rose in the mid-20% range. NAND sales rose 274% on an approximate 200% increase in average prices and a similar rise in bits. Cost of goods sold rose only 14%, so gross margin jumped from 39.8% to 80.7%. Net income rose from $8.5 billion to $85.0 billion.
What needs to be normalized: the accounting adjustments are relatively small — stock-based compensation, a $500 million patent license charge in Q4, and a loss on early debt repayment. Excluding them, net income per the company was $86.8 billion, a 2.1% gap. What does change comparisons is quarter length: Q4 had 14 weeks. Revenue rose 30.8% versus Q3; adjusted to 13 weeks, the increase is about 21.5%.
| $ millions | Q4 FY25 | Q1 FY26 | Q2 FY26 | Q3 FY26 | Q4 FY26 |
|---|---|---|---|---|---|
| Revenue | 11,315 | 13,643 | 23,860 | 41,456 | 54,229 |
| Gross profit | 5,054 | 7,646 | 17,755 | 35,056 | 47,047 |
| Gross margin | 44.7% | 56.0% | 74.4% | 84.6% | 86.8% |
| Net income | 3,201 | 5,240 | 13,785 | 28,243 | 37,701 |
| Diluted EPS ($) | 2.83 | 4.60 | 12.07 | 24.67 | 32.87 |
The multi-year context: a cyclical industry
Over the last ten years Micron's gross margin ranged from minus 9.1% (2023) to 80.7% (2026). The weighted average for 2017–2025 was 37.5%, and the peak quarterly margin before the current cycle was 61.0% (Q4 2018). Fiscal 2026 net income alone ($85.0 billion) exceeds the cumulative net income of the nine years 2017–2025 combined ($46.3 billion).
| Fiscal year, $ billions | 2018 | 2020 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|
| Revenue | 30.4 | 21.4 | 30.8 | 15.5 | 25.1 | 37.4 | 133.2 |
| Gross margin | 58.9% | 30.6% | 45.2% | -9.1% | 22.4% | 39.8% | 80.7% |
| Net income | 14.1 | 2.7 | 8.7 | -5.8 | 0.8 | 8.5 | 85.0 |
| Operating cash flow less capex | 8.5 | 0.1 | 3.1 | -6.1 | 0.1 | 1.7 | 59.0 |
Balance Sheet & Capital
On Sept 3, 2026 Micron held $73.5 billion in cash and marketable securities, versus $11.9 billion a year earlier. Financial debt fell from $14.6 billion to $5.2 billion: during the year the company prepaid notes with $8.8 billion of principal, including an April 2026 tender offer. Net cash was $68.3 billion. Shareholders' equity rose from $54.2 billion to $138.4 billion.
Three new balance-sheet lines worth knowing:
- Customer deposits — $12.9 billion. Customers that signed strategic agreements deposited cash to secure supply. Per the filing, nearly all deposits are scheduled to be repaid in 2029–2031 if customers meet their purchase commitments. This is a liability, not revenue. Excluding the deposits, net cash is $55.4 billion.
- Long-term income taxes payable — $9.8 billion, versus $0.6 billion a year earlier. Per the filing, the increase relates to the global minimum tax (Pillar Two), which Singapore applied from 2026. The tax is in the income statement but not yet paid, so it lifts this year's cash flow.
- Pricing adjustments payable to customers — $4.3 billion, versus $1.2 billion. The filing describes it as "consideration payable to customers, including pricing adjustments and returns" and does not detail the source of the increase.
Capital return: in fiscal 2026 the company repurchased 2.5 million shares for $650 million and paid $610 million in dividends — about 2% of free cash flow. On Oct 8, 2026 the Board raised the repurchase authorization to $35.16 billion. Per the filing, repurchases may be made only from Dec 9, 2026 and are subject to the U.S. CHIPS Act funding agreements, which limit buybacks based on free cash flow and include an upside-sharing mechanism with the government.
Capital expenditures: fiscal 2026 — $30.7 billion gross, $27.4 billion net of government incentives. According to management, net capex will be about $25 billion in the first half of fiscal 2027, and higher in the second half. Projects include two fabs in Idaho, a fab in New York, a fab acquired in Taiwan for $1.8 billion, and packaging and NAND facilities in Singapore.
Segments
All four units grew three- to five-fold. Each unit's operating margin moved from a 12%–45% range to a 71%–80% range.
| Unit, $ millions | Revenue 2025 | Revenue 2026 | Change | Op. margin 2025 | Op. margin 2026 | Op. margin Q4 |
|---|---|---|---|---|---|---|
| Cloud memory (incl. HBM) | 13,524 | 43,085 | +219% | 45% | 72% | 76% |
| Core data center | 7,229 | 37,592 | +420% | 30% | 79% | 85% |
| Mobile and client | 11,859 | 36,601 | +209% | 17% | 80% | 88% |
| Automotive and embedded | 4,753 | 15,886 | +234% | 12% | 71% | 79% |
What stands out: in Q4 the cloud unit, which includes HBM, posted the lowest operating margin of the four, down from 78% in Q3 to 76%. Mobile and client reached 88%, even though, per the filing, supply was redirected from it to other units and its bit shipments declined. The company does not report HBM revenue separately.
Geography: by customer headquarters, 68.6% of revenue came from U.S. customers, 12.7% from Taiwan and 6.3% from mainland China.
Competitive Position
Micron is one of the world's three leading DRAM makers, alongside Samsung and SK hynix. Per the filing, the majority of its DRAM bit production in Q4 was already on its leading-edge 1-gamma node, its first using EUV lithography. In HBM, HBM4 has entered volume production and the next generation is in development. The company has been granted more than 62,000 patents.
The change over the past year: strategic customer agreements. In Q3 and Q4 the company signed multi-year take-or-pay agreements with a number of customers — binding volume commitments, most with minimum and maximum price bands. According to management, gross margins on these agreements, even at floor pricing, will be meaningfully above its peak quarterly margins in any past cycle. The filing discloses remaining performance obligations of about $134 billion, based on committed volumes and minimum pricing, of which about one-fourth will be recognized within 12 months. The company notes this figure is not indicative of future revenue under these contracts and excludes agreements without fixed pricing or price bands.
Where the filing points to pressure: per the filing, Micron and its competitors plan new fabs, and if demand does not increase or remain stable, average selling prices could decline materially. The filing also cites government support for Chinese producers, China's May 2023 decision that hurts sales in China, and the risk that customers buy beyond their needs to meet contract obligations — which could build inventory on their side.
How to Think About This Company
With Micron, the central question is not whether the year was good, but how much of it repeats. Fiscal 2026 net income exceeds the nine preceding years combined. A reader who views the company through the last year and one who views it through the last ten years will see two very different pictures of the same business.
The mechanism is price. Bit volume rose about 25%, the average price nearly tripled, and cost of goods sold barely moved. So almost every extra dollar of price reached the bottom line. The same mechanism works with the same force when prices fall: in fiscal 2023 gross margin was negative.
The industry's history. After the 2018 peak, gross margin fell 28 points within two years. After 2022 it fell 54 points within one year. In each of these cycles, added supply — from Micron and its competitors — was part of the story. According to management, Micron's fiscal 2027 capital spending will be well above fiscal 2026.
The strategic agreements are the case that this time is different. Customers deposited $12.75 billion in cash and opened $7 billion of letters of credit to secure supply — behavior not seen in earlier cycles. At the same time, the portion priced at minimum pricing and recognized within a year is about $33.5 billion, while the company's revenue guidance for a single quarter is $61.5 billion. The open question is what share of future supply the agreements cover, and at what minimum price. The filing does not say.
Reading cash flow in layers. Adjusted free cash flow, per the company, was $62.3 billion. It includes about $9.2 billion of tax recorded but not yet paid, and an increase of about $3.1 billion in pricing adjustments payable to customers. Customer deposits, by contrast, were recorded in financing activities and are not in free cash flow.
A 14-week quarter. Q4 was one week longer than usual. The next sequential comparison will be against a normal 13-week quarter.
The legal side touches the core of the story. In June 2026 a class action was filed against Micron, Samsung and SK hynix alleging coordination to restrict supply and fix DRAM prices since October 2022 — the same period in which prices rose. The company has not estimated the exposure. In addition, in October 2026 a Munich court ordered Micron to stop selling certain NAND products in Germany in a YMTC patent case, and Micron has appealed. The dispute with Netlist was settled in October 2026.
Today's multiple versus history. At the end of fiscal 2022, an earlier peak year, Micron traded at about 1.3 times book value and about 7 times earnings. On Oct 9, 2026 — 8.4 times book and 13.8 times trailing-twelve-month earnings. Market cap rose from $136.5 billion at the end of fiscal 2025 to $1,164 billion. These figures describe the starting point; they do not set a direction.
A balance sheet that changes the starting point of the next cycle. In fiscal 2023 the company entered the downturn with net debt. Today it has net cash of $68.3 billion, or $55.4 billion excluding customer deposits. Any downturn scenario would start from a different place than before.
This framework is intended to structure analysis, not to produce an investment conclusion. It does not take part in the decision — the decision is the reader's.
Risks & Monitoring
Risks that emerge from the filings
- Price cyclicality: growth rested mainly on price. Per the filing, added industry supply could reduce average selling prices materially.
- Strategic agreements: per the filing, the agreements constrain supply flexibility; if customers fail to meet commitments, enforcement may be needed; and buying beyond needs could build customer inventory and lead to oversupply.
- Antitrust: a U.S. putative class action (and a similar case in Hawaii) alleging DRAM price coordination. Not estimated.
- Patents: the Munich order in favor of YMTC on NAND products in Germany; further YMTC suits in the U.S., China, the UK and Germany; AMT and Nextech suits.
- China: the May 2023 decision barring critical-infrastructure operators from buying Micron products; state support for Chinese producers.
- CHIPS Act: buyback limits and upside sharing of up to 75% of grants; grants tied to milestones.
- Tax: the effective tax rate rose to 14.8% with Singapore's global minimum tax.
Items to monitor in the Q1 fiscal 2027 report (late December 2026)
| # | Item | Latest reading |
|---|---|---|
| 1 | Revenue and gross margin vs company guidance | Guidance: $61.5B ± 1.5 · ~85.95% |
| 2 | Remaining performance obligations, and the 12-month portion | ~$134B · about one-fourth |
| 3 | Customer deposits and letters of credit | $12.9B · $7B |
| 4 | Revenue explanation: price vs volume | Price +180%/+200%, bits ~+25% |
| 5 | Cloud unit margin vs other units | 76% in Q4, down sequentially |
| 6 | Inventory — work in process and finished goods separately | $10.4B; finished goods down to $0.96B |
| 7 | Pricing adjustments payable to customers | $4.3B |
| 8 | Net capital expenditures | Per management: ~$11.5B in Q1 |
| 9 | Actual buybacks from Dec 9, 2026 | Authorization: $35.16B |
| 10 | Antitrust class action and Munich appeal | Open |
Scenario Framework
The scenarios below are descriptive, not predictive. They contain no prices, no probabilities, and do not rank outcomes. Their only purpose is to organize the conditions that would need to hold for each state to materialize, so they can be checked against future filings.
Scenarios are descriptive, not predictive.
- If remaining performance obligations, and the portion recognized within a year, keep growing in dollars
- If the company discloses that the agreements cover a large share of supply, and at what minimum price
- If margins stay high even as industry volumes grow
- If buybacks are executed at the scale the authorization allows
- If prices stabilize at current levels and growth shifts from price to volume
- If the agreements cover a fixed share of sales without further disclosure
- If capex grows as management described and inventory stays stable
- If legal proceedings continue without resolution
- If added industry supply exceeds demand and average prices fall
- If finished-goods inventory, at the company or at customers, starts to rise
- If pricing adjustments payable to customers keep growing faster than revenue
- If the antitrust case or the Munich order advance to a monetary charge or broad sales restriction
Analytical Lens
The six questions below are identical in every company review we publish. They are deliberately open and do not lead to a single conclusion. Their role is to let the reader examine the company along the same six dimensions as every other company.
Key Observations
1. In fiscal 2026 Micron reported revenue of $133.2 billion (+256%), net income of $85.0 billion and a gross margin of 80.7%. Per the filing, the increase was driven mainly by an approximate 180% rise in DRAM average prices and about 200% in NAND.
2. Fiscal 2026 net income exceeds cumulative net income for 2017–2025 ($46.3 billion). Gross margin over the decade ranged from minus 9.1% to 80.7%.
3. Remaining performance obligations under the strategic agreements are about $134 billion, based on committed volumes and minimum pricing, with about one-fourth to be recognized within 12 months. Customers deposited $12.75 billion, scheduled to be repaid in 2029–2031.
4. Net cash rose to $68.3 billion after $8.8 billion of early note repayments. The repurchase authorization was raised to $35.16 billion, effective Dec 9, 2026 and subject to the CHIPS Act agreements.
Bakshi Finance operates as a Family Office for qualified clients only. Mr. Yaron Bakshi held an investment advisory license from 2008 to 2023. As of the publication date of this document, the company does not hold an investment advisory, investment marketing, or portfolio management license.
This document is intended for research and professional education purposes only. Nothing herein constitutes a recommendation to buy, sell, hold, or take any action in securities. It is not a substitute for advice that takes into account each person's individual data and needs. Any decision is the sole responsibility of the investor.
Past performance is not indicative of future results. Data was drawn from official sources: the Form 10-K for the fiscal year ended September 3, 2026 (filed October 9, 2026), the Q4 earnings release (September 30, 2026), the Q3 Form 10-Q, and the company's Form 8-K filings with the U.S. Securities and Exchange Commission. Historical multiples and price: stockanalysis.com. Filing updates published after this date are not included.
Qualified-Client Review — Family Office
The full analytical review of Micron (MU) for fiscal 2026 is available to Bakshi Finance premium clients.
The review includes a 10-section analysis, "How to Think About This Company", a structured scenario framework, and a 6-dimension Analytical Lens.
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