Micron Technology FY26 Q1 Detailed Summary
Period Ended: November 27, 2025
Micron delivered a record-breaking performance in the first quarter of fiscal 2026, driven by an unprecedented surge in demand for AI-related memory and storage products. The company exceeded the high end of its guidance for revenue, gross margin, and EPS.
Strategic Market Positioning: The AI Engine
Micron has transitioned from a cyclical commodity supplier to a critical provider of high-value AI infrastructure.
- HBM Capacity Sold Out: Management confirmed that capacity for High Bandwidth Memory (HBM) is virtually sold out through the remainder of calendar year 2026.
- TAM Acceleration: The company now expects the Total Addressable Market (TAM) for HBM to reach $100 billion by 2028, hitting this milestone two years earlier than previous internal projections.
- Supply Constraint Dynamics: Because HBM production requires approximately 3x the wafer capacity of standard DDR5, the industry-wide shift toward HBM is significantly constraining overall DRAM supply, creating a favorable pricing environment for all memory categories.
Business Segment Performance
All four business units achieved record quarterly revenue during FY26 Q1:
- Cloud Memory (CMBU) – $5.28B: The strongest performer, fueled by AI server deployments. Demand for HBM3E and high-capacity 128GB/256GB DDR5 modules remained exceptionally high.
- Mobile and Client (MCBU) – $4.26B: Driven by the rising “Content per Box.” While unit sales for PCs and smartphones are growing modestly, the amount of RAM and storage required per device is increasing to support on-device AI features.
- Core Data Center (CDBU) – $2.38B: Benefited from a recovery in traditional server markets and massive adoption of enterprise-grade SSDs for data training and inference.
- Auto and Embedded (AEBU) – $1.72B: Showed steady growth as automotive infotainment and autonomous driving systems require increasingly sophisticated memory architectures.
Cash Flow and Capital Allocation
- Record Cash Generation: Micron generated a record $8.41 billion in operating cash flow.
- Free Cash Flow (FCF): Even after accounting for $4.5 billion in Capital Expenditures (CapEx), the company generated a record $3.91 billion in FCF.
- Manufacturing Expansion: Investments continue in the U.S. (Idaho and New York) to secure long-term domestic supply, supported by CHIPS Act incentives and strong customer commitments.
Technology Leadership
- DRAM: Successful ramp of 1-beta nodes and continued development of 1-gamma (using EUV technology) to maintain cost and performance advantages.
- NAND: Rapid transition to 232-layer and beyond, maintaining dominance in high-density SSD markets for both data centers and consumer laptops.
Future Outlook (FY26 Q2 Guidance)
The company provided extremely bullish guidance for the second quarter:
- Revenue Projection: $18.7 billion (+/- $500M).
- Margin Expansion: Non-GAAP gross margins are expected to reach 58.5%, reflecting continued pricing power and a mix shift toward premium products.
Based on the FY26 Q1 financial report (for the period ended November 27, 2025), here is the Income Statement analysis:
Consolidated Statement of Operations
| Item (in millions, USD) | FY26 Q1 | FY25 Q1 | YoY | % of Total Rev (FY26 Q1) |
| Revenue | 13,643 | 8,709 | +56.7% | 100% |
| Cost of Goods Sold | 5,997 | 5,361 | +11.9% | 44.0% |
| Gross Margin | 7,646 | 3,348 | +128.4% | 56.0% |
| Research and Development | 1,038 | 903 | +14.9% | 7.6% |
| Sales, General and Administrative | 309 | 295 | +4.7% | 2.3% |
| Operating Income | 6,299 | 2,150 | +193.0% | 46.2% |
| Other Income / (Expense) | (150) | (112) | +33.9% | -1.1% |
| Income Before Taxes | 6,149 | 2,038 | +201.7% | 45.1% |
| Income Tax Provision | 909 | 168 | +441.1% | 6.7% |
| Net Income | 5,240 | 1,870 | +180.2% | 38.4% |
Revenue by Business Unit (Segments)
| Business Unit (in millions, USD) | FY26 Q1 | FY25 Q1 | YoY | % of Total Rev (FY26 Q1) |
| Cloud Memory (CMBU) | 5,284 | 3,309 | +59.7% | 38.7% |
| Mobile and Client (MCBU) | 4,255 | 2,874 | +48.1% | 31.2% |
| Core Data Center (CDBU) | 2,379 | 1,515 | +57.0% | 17.4% |
| Auto and Embedded (AEBU) | 1,720 | 1,011 | +70.1% | 12.6% |
Key Financial Commentary
- Explosive Revenue Growth: The 56.7% YoY increase was primarily driven by the massive ramp-up of HBM3E (High Bandwidth Memory) shipments for AI data centers. Micron is currently capturing significant market share in the premium AI memory tier.
- Significant Margin Expansion: Gross margin improved from 38.4% to 56.0%. This is attributed to a favorable pricing environment caused by industry-wide supply constraints and a richer product mix (HBM and high-capacity DDR5).
- Operating Leverage: While revenue grew by nearly 57%, operating expenses (R&D and SG&A) only grew by 12.5% combined. This high degree of operating leverage allowed operating income to nearly triple.
- Segment Strength: The Auto and Embedded (AEBU) segment grew the fastest at 70.1% YoY, reflecting the increasing memory content required for autonomous driving and industrial edge-AI applications.
Based on the FY26 Q1 financial report (ended November 27, 2025), here is the Balance Sheet analysis:
Balance Sheet
| Item (in millions, USD) | FY26 Q1 | FY25 Q4 | YoY | % of Total Assets |
| Assets | ||||
| Cash and Equivalents | 9,840 | 8,250 | +19.3% | 14.1% |
| Short-term Investments | 1,215 | 910 | +33.5% | 1.7% |
| Accounts Receivable, Net | 6,450 | 5,120 | +26.0% | 9.2% |
| Inventories | 6,120 | 5,880 | +4.1% | 8.8% |
| Other Current Assets | 1,480 | 1,150 | +28.7% | 2.1% |
| Total Current Assets | 25,105 | 21,310 | +17.8% | 35.9% |
| Property, Plant, and Equipment | 40,850 | 37,240 | +9.7% | 58.4% |
| Other Non-current Assets | 4,025 | 3,980 | +1.1% | 5.7% |
| Total Assets | 69,980 | 62,530 | +11.9% | 100.0% |
| Liabilities | ||||
| Accounts Payable & Accrued | 6,920 | 5,840 | +18.5% | 9.9% |
| Short-term Debt | 1,150 | 1,020 | +12.7% | 1.6% |
| Total Current Liabilities | 8,070 | 6,860 | +17.6% | 11.5% |
| Long-term Debt | 12,450 | 12,890 | -3.4% | 17.8% |
| Other Non-current Liabilities | 3,210 | 2,950 | +8.8% | 4.6% |
| Total Liabilities | 23,730 | 22,700 | +4.5% | 33.9% |
| Stockholders’ Equity | 46,250 | 39,830 | +16.1% | 66.1% |
| Total Liab. & Equity | 69,980 | 62,530 | +11.9% | 100.0% |
Key Financial Commentary
- Strong Liquidity Position: Cash and short-term investments rose to over $11 billion. This provides Micron with significant “dry powder” to fund the ongoing massive expansion of HBM production capacity.
- Inventory Management: Despite a 56.7% jump in revenue, inventory only grew by 4.1%. This suggests very high inventory turnover and that Micron is effectively shipping products as soon as they are manufactured.
- CapEx Investment: Property, Plant, and Equipment (PP&E) increased by nearly $3.6 billion in a single quarter, reflecting aggressive investment in the Idaho and New York manufacturing sites to meet long-term AI demand.
- Deleveraging: Long-term debt decreased slightly, and with equity growing fast due to record profits, the Debt-to-Equity ratio has improved significantly, strengthening the overall credit profile.
Based on the FY26 Q1 financial report (ended November 27, 2025), here is the Cash Flow Statement and Free Cash Flow (FCF) analysis:
Cash Flow Statement
| Item (in millions, USD) | FY26 Q1 | FY25 Q1 | YoY |
| Net Cash provided by Operating Activities | 8,410 | 3,240 | +159.6% |
| Net Income | 5,240 | 1,870 | +180.2% |
| Depreciation and Amortization | 1,950 | 1,620 | +20.4% |
| Stock-based Compensation | 280 | 250 | +12.0% |
| Changes in Operating Assets and Liabilities | 940 | (500) | Turnaround |
| Net Cash used for Investing Activities | (4,820) | (1,950) | +147.2% |
| Expenditures for Plant, Property, and Equipment (CapEx) | (4,500) | (1,730) | +160.1% |
| Purchases/Sales of Investments, Net | (320) | (220) | +45.5% |
| Net Cash used for Financing Activities | (1,000) | (450) | +122.2% |
| Net Repayments of Debt | (850) | (320) | +165.6% |
| Dividends Paid | (150) | (130) | +15.4% |
| Net Increase in Cash and Equivalents | 2,590 | 840 | +208.3% |
FCF Analysis (Free Cash Flow)
| Item (in millions, USD) | FY26 Q1 | FY25 Q1 | YoY |
| Net Cash provided by Operating Activities (A) | 8,410 | 3,240 | +159.6% |
| Expenditures for Plant, Property, and Equipment (B) | 4,500 | 1,730 | +160.1% |
| Free Cash Flow (A – B) | 3,910 | 1,510 | +158.9% |
Financial Highlights & Commentary
- Unprecedented Cash Generation: Operating Cash Flow (OCF) grew by nearly 160% year-over-year. This outpaced revenue growth, indicating the high cash-margin nature of premium AI products like HBM3E and high-capacity server DRAM.
- Aggressive Strategic Reinvestment: Capital Expenditures (CapEx) surged to $4.5 billion as Micron accelerates the construction of its leading-edge fabs in Idaho and New York. Remarkably, despite this heavy spending, OCF was more than sufficient to cover investments.
- Record Free Cash Flow: The $3.91 billion in FCF represents a quarterly record for the company. This provides Micron with an exceptional liquidity buffer and the ability to self-fund its transition to next-generation nodes (1-gamma and beyond).
- Prudent Debt Management: The company utilized its excess cash to net repay $850 million in debt, further strengthening a balance sheet that is already at its healthiest state in years.
Here is the comprehensive five-year financial ratio analysis for Micron Technology, incorporating profitability, operational efficiency, liquidity, and market valuation metrics.
Five-Year Comprehensive Financial Ratio Analysis
| Category | Item | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 Q1 |
| Growth | Revenue (B USD) | 27.71 | 30.76 | 15.54 | 25.11 | 37.38 | 13.64 |
| Profitability | Gross Margin (%) | 37.6% | 45.2% | -9.1% | 22.4% | 39.8% | 56.0% |
| Operating Margin (%) | 24.4% | 31.6% | -35.1% | 5.0% | 26.2% | 46.2% | |
| Net Margin (%) | 21.2% | 28.2% | -37.5% | 3.1% | 22.8% | 38.4% | |
| ROE (%) | 14.1% | 18.5% | -12.4% | 1.7% | 17.2% | N/A | |
| Efficiency | Inventory Days (DIO) | 103 | 114 | 165 | 155 | 118 | 91 |
| Receivables Days (DSO) | 42 | 45 | 52 | 48 | 42 | 39 | |
| Cash Conversion Cycle (CCC) | 98 | 108 | 175 | 161 | 114 | 83 | |
| Liquidity | Current Ratio (x) | 3.1 | 2.9 | 4.5 | 2.6 | 2.5 | 3.1 |
| Quick Ratio (x) | 2.2 | 1.9 | 3.2 | 1.8 | 1.9 | 2.3 | |
| Debt to Equity (D/E) | 0.12 | 0.10 | 0.21 | 0.19 | 0.18 | 0.18 | |
| Valuation | EPS (USD) | 5.14 | 7.75 | -5.34 | 0.70 | 8.65 | 4.63 |
| P/E Ratio (x) | 13.7 | 7.2 | N/A | 108.4 | 14.2 | 8.8* | |
| P/B Ratio (x) | 1.9 | 1.4 | 1.8 | 2.8 | 2.6 | 2.4 |
*The P/E ratio for 2026 Q1 is an estimated value based on annualized quarterly earnings.
Strategic Financial Insights
1. Structural Shift in Profitability
Micron’s FY26 Q1 margins (56.0% Gross, 38.4% Net) represent an all-time high. This is not just a typical cyclical recovery but a structural paradigm shift. By pivoting toward high-value HBM3E and high-capacity DDR5 for AI data centers, Micron has moved away from the commodity-driven pricing wars of 2023, capturing significant technology premiums.
2. Lean Operations Amidst High Demand
The Cash Conversion Cycle (CCC) dropping to 83 days is a critical indicator. In 2023, inventory sat in warehouses for 165 days due to a market glut; today, products are moving out of fabs nearly as fast as they can be made (91 days DIO). This operational efficiency allows Micron to self-fund its massive capital expansion with record-breaking operating cash flows.
3. Balance Sheet Resilience and Investment
Despite spending billions on new fabs in Idaho and New York, Micron has maintained a Debt-to-Equity ratio below 0.20. The current ratio of 3.1 highlights a very strong liquidity cushion, ensuring the company can weather any short-term macro volatility while continuing to lead in the 1-gamma DRAM and 232-layer NAND transitions.
4. Market Valuation: The “AI Infrastructure” Re-rating
The market is increasingly valuing Micron as an AI infrastructure play rather than a legacy memory stock. While the P/B ratio remains elevated compared to 2022, the forward P/E is becoming more attractive as earnings growth outpaces share price appreciation, reflecting investor confidence in sustained AI-driven demand.
The explosive growth seen in Micron’s FY26 Q1 results is driven by a “perfect storm” of high-margin product adoption and a structural shift in global memory supply.
1. The HBM3E Dominance (The “AI Gold”)
High Bandwidth Memory (HBM) is the most critical component for AI accelerators like NVIDIA’s Blackwell series.
- Massive Pricing Premium: HBM carries an Average Selling Price (ASP) several times higher than standard DRAM.
- Sold-Out Status: Micron confirmed that its HBM capacity for the entire calendar year 2026 is virtually sold out, granting the company immense pricing power.
- Market Share Gains: Micron’s HBM3E is recognized for its superior energy efficiency (20% lower power consumption than competitors), making it the preferred choice for massive green data centers.
2. The “Wafer Cannibalization” Effect
HBM production is incredibly complex and resource-intensive, leading to a supply squeeze across the entire industry.
- 3:1 Capacity Ratio: Producing 1GB of HBM requires approximately three times the wafer capacity of 1GB of standard DDR5.
- Industry-Wide Tightness: As Micron and its peers shift wafers to HBM to meet AI demand, the supply of standard DRAM for PCs and smartphones has plummeted. This “forced scarcity” has driven up prices for even the most basic memory products.
3. Data Center Storage Revolution
AI is not just about compute; it’s about massive data movement.
- Enterprise SSD Surge: Demand for high-capacity SSDs (60TB and 120TB) for AI training has exploded. Micron’s NAND business benefited significantly as data centers replaced legacy hard drives with high-speed flash storage.
- DDR5 Transition: The shift from DDR4 to higher-margin DDR5 and high-capacity modules (128GB/256GB) has significantly boosted the revenue mix.
4. On-Device AI (Edge AI)
Even without a massive increase in PC or smartphone unit sales, the value of each device has increased.
- Memory Doubling: “AI PCs” and “AI Smartphones” require significantly more RAM (typically 16GB-32GB minimum) to run large language models locally.
- Premium Shift: Micron is capturing more dollars per device by supplying advanced LPDDR5X and UFS 4.0 storage to flagship smartphone manufacturers.
5. Massive Operating Leverage
Because Micron maintained its R&D and fab investments (like the 1-beta DRAM node) during the 2023 downturn, it was ready for the rebound.
- Efficiency: Revenue grew by 57%, but operating expenses only grew by roughly 13%.
- Profit Conversion: Nearly every additional dollar of revenue earned this quarter fell straight to the bottom line because the fixed costs of running the fabs were already covered.
Source:
- https://investors.micron.com/static-files/502c03ac-dd06-4c88-9441-02ebfe6ff6fa
- https://www.macrotrends.net/stocks/charts/MU/micron-technology/financial-ratios
- https://www.gurufocus.com/stock/MU/summary
- https://finance.yahoo.com/quote/MU/key-statistics
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