Micron Technology, Inc. (MU) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call suggests a positive outlook with strong demand for NAND and DRAM driven by AI and data centers, despite existing supply constraints. Management's strategic decisions to expand cleanroom capacity and focus on long-term customer relationships indicate confidence in future growth. The Q&A section highlights robust demand and strategic allocation, with a focus on disciplined investment. While some uncertainties exist, the overall sentiment is positive, driven by strong pricing and demand trends, which are likely to boost the stock price in the short term.
Key Financial Performance
Revenue $4.1 billion, down 10% year-over-year, due to weaker demand in the PC and smartphone markets.
Gross Margin 20%, a decrease of 5 percentage points year-over-year, driven by increased production costs.
Operating Cash Flow $1.2 billion, a decline of 15% year-over-year, attributed to higher capital expenditures.
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Operating Highlights
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Risk or Challenges
Explicit Risks: Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.
Regulatory Risks: Documents filed with the SEC, including Form 10-K and 10-Q, discuss risks that may affect results.
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Guidance & Outlook
Forward-looking statements: The matters discussed include forward-looking statements regarding market demand and supply, market trends and drivers, and expected results and guidance. These statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made.
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Shareholder Return Plan
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Key Q&A
Q:Can you talk about the decision to add greenfield capacity for NAND and the trends giving confidence to add that capacity?
A:Manish Bhatia explained that the decision was driven by the need for additional cleanroom space for technology transitions and the decision to locate more NAND R&D in Singapore. Sumit Sadana clarified that it is not a greenfield site but an existing site with added cleanroom space. He highlighted robust demand for NAND driven by data center growth, AI servers, and high-capacity SSDs, with demand exceeding supply. The new cleanroom capacity is expected to come online in the second half of 2028.
Q:How are you internally modeling the impact of new DRAM fabs coming online next year and the year after on pricing?
A:Manish Bhatia stated that the supply impact from new DRAM fabs will be felt towards fiscal 2028, with tight supply conditions expected to continue beyond 2026. Sumit Sadana added that demand forecasts for 2026 and 2027 are escalating, and supply increases will not significantly close the gap. Mark Murphy mentioned the ability to modulate tool installs as an option.
Q:Can you frame the current quarter guidance between DRAM and NAND, and assumptions about bit shipment growth?
A:Mark Murphy noted that both DRAM and NAND pricing increased strongly in Q2, with NAND pricing rising more than DRAM. Both also grew volume sequentially, with NAND less than DRAM. For Q3, price is expected to be the largest factor, with modest volume growth for both DRAM and NAND.
Q:What are your thoughts on CXL and its effect on DRAM?
A:Sumit Sadana stated that CXL is being experimented with by customers and could be deployed at scale if feasible. However, there are technical limitations, and large-scale deployment will require significant work. He emphasized that demand for DRAM remains robust, and CXL is unlikely to significantly impact overall DRAM demand.
Q:How are you thinking about HBM versus non-HBM allocation, and are you leaving money on the table by not pivoting more towards non-HBM?
A:Sumit Sadana explained that HBM pricing is set in advance and provides robust ROI. Upside volumes are sold at higher prices. Allocation decisions are strategic, aiming to meet customer needs for balanced AI systems. Non-HBM margins are higher, but the company focuses on long-term customer relationships rather than short-term pricing opportunities.
Q:What is the outlook for AI data center SSD demand and its impact on NAND?
A:Sumit Sadana highlighted strong demand for AI data center SSDs, driven by KV cache applications and HDD shortages. The NAND market is significantly undersupplied, and demand continues to escalate. The company’s portfolio is well-positioned to gain share in this space.
Q:How do you view the mix of DRAM to NAND CapEx for 2026 and 2027?
A:Mark Murphy stated that CapEx will be dominated by DRAM and HBM additions. NAND CapEx will increase in 2027 but remain a smaller portion compared to DRAM. Construction costs are expected to rise significantly, with FY '26 construction costs in the mid- to high single-digit billions.
Q:Do you expect HBM content per XPU to plateau, or will it continue to see large uplifts?
A:Sumit Sadana stated that AI trends require more DRAM capacity and bandwidth, with HBM delivering efficient power consumption. He emphasized that memory is becoming a strategic asset in the AI era, and the trend of increasing HBM content is expected to continue.
Q:Can you update your view of long-term bit growth for DRAM and NAND?
A:Sumit Sadana noted that long-term bit growth numbers have not been updated but emphasized that current forecasts are supply-constrained. Demand for DRAM and NAND remains robust, driven by AI and other applications, with tight supply conditions expected to persist.
Q:When do you expect cleanroom capacity to catch up with demand?
A:Manish Bhatia stated that cleanroom constraints will persist through 2027, with meaningful improvements expected in 2028. Sumit Sadana added that escalating demand from various vectors makes it difficult to predict when supply will catch up with demand.
Q:Is 2027 the peak year for construction CapEx, and what is the normalized mix between construction and equipment?
A:Mark Murphy stated that CapEx will be lumpy, with significant increases in construction costs through 2027. He did not confirm if 2027 will be the peak year but emphasized disciplined investment to meet demand.
Q:What are the cost dynamics and depreciation expectations for the next few quarters?
A:Mark Murphy highlighted ongoing cost reductions from node transitions and efficient operations. Start-up costs for new fabs will add $100-200 million per quarter, with minimal impact on margins. Depreciation will depend on production wafer output and asset life, with long depreciation periods for greenfield projects.
Q:Review of Unclear Management Responses
A:Management avoided providing specific long-term bit growth numbers for DRAM and NAND, citing supply constraints and escalating demand. They also did not confirm if 2027 would be the peak year for construction CapEx, emphasizing the uncertainty of demand and the need for disciplined investment.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Analyst Instructions
Instructions conference
Ladies gentleman
Micron Post
Post Analyst
Relations Satya
conference Investor
gentleman Micron
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The earnings call highlights a significant decline in revenue, gross margin, and operating cash flow, alongside a substantial net loss, indicating severe financial distress. The absence of shareholder return plans further exacerbates concerns. The lack of explicit risks does not mitigate the negative financial performance. Consequently, the stock price is likely to experience a strong negative reaction, potentially exceeding an 8% decline.
Micron Technology, Inc. (MU) Q2 2026 Earnings Call Transcript
Positive3-18
The earnings call suggests a positive outlook with strong demand for NAND and DRAM driven by AI and data centers, despite existing supply constraints. Management's strategic decisions to expand cleanroom capacity and focus on long-term customer relationships indicate confidence in future growth. The Q&A section highlights robust demand and strategic allocation, with a focus on disciplined investment. While some uncertainties exist, the overall sentiment is positive, driven by strong pricing and demand trends, which are likely to boost the stock price in the short term.
MU Slides
MU Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
