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Micron (MU) Q4 FY2026 earnings: customer agreements rise to 26

Editorial illustration for Micron (MU) Q4 FY2026 earnings: customer agreements rise to 26
Ddrillr ResearchOriginal research
Published 6 min read

Summary

Micron's fiscal Q4 2026 revenue of $54.2B and 87.0% gross margin beat June guidance, as strategic customer agreements grew to 26 with $32B of commitments.

Micron (MU) fiscal Q4 2026 earnings, released on September 30, 2026 in a results press release and discussed on the same day's earnings call, came in above the company's June expectations on revenue, gross margin and contract coverage for the quarter ended September 3 [1][2]. The research behind this update had followed three questions: whether the memory prices behind a record gross margin would hold, whether long-term supply agreements would put a cash-backed floor under part of revenue, and whether roughly $27 billion of annual capital spending would land in a short market or become fixed cost after prices turn. This quarter updated the first two positively. Capital spending came in on guidance, but fiscal 2027 investment roughly doubles, so the fixed-cost risk has been pushed out rather than removed. Earnings still come from price times volume, but more revenue is now locked under contract, and those agreements have not yet been through a price decline.

Micron is one of a small number of global suppliers of DRAM and NAND memory chips [3]. It sells through four business units covering cloud, data center, mobile and client, and automotive and embedded customers; this quarter the two data center units together made up about 63% of revenue [1]. Profit comes from the spread between the price per bit and the cost of manufacturing it.

Strategic customer agreements rise to 26 and customer cash arrives

Micron's long-term agreements expanded sharply in a single quarter. In June the company disclosed 16 take-or-pay agreements covering about 20% of DRAM volume and about 33% of NAND volume over 2026 to 2030, with $22 billion of customer commitments [4][5]. On this call it reported 26 agreements covering more than 35% of estimated revenue through 2030, with commitments up to $32 billion, mostly cash deposits [2]. The old and new coverage measures use different bases and cannot be converted directly.

Customer cash has already reached the financial statements, which shows the agreements are binding. Fiscal 2026 cash inflows from customer contract liability deposits were $12.747 billion, and noncurrent customer contract liabilities rose from $568 million at the end of May to $12.895 billion [1]. Based on that balance change, most of the deposits arrived in the fourth quarter, more than the roughly $10 billion the company had expected [6]. Management said more than 75% of 2027 output is already committed, including orders outside the agreements [2].

The agreements cut both ways financially. The largest ones carry a floor price and also a price ceiling near the market price of the second calendar quarter of 2026 [7], so higher coverage means less revenue upside from further price increases. This quarter did not test whether the floor holds when prices fall, and an update to the minimum contracted revenue will have to wait for the annual report.

Revenue and gross margin beat guidance

Fourth-quarter revenue and gross margin both exceeded Micron's June guidance. The company had guided to revenue of $50.0 billion plus or minus $1.0 billion and a gross margin of about 86% [8], and said that outlook reflected a meaningful slowdown in price increases [9]. Actual revenue was $54.229 billion, up 30.8% sequentially, and non-GAAP gross margin was 87.0% versus 84.9% in the third quarter [1]. The fourth quarter had one more week than the third.

Growth came from both product lines. DRAM revenue was $39.8 billion, up 27% sequentially, and NAND revenue was $14.1 billion, up 42% sequentially [2]. Micron did not split out price and shipment volume, but in a quarter with largely fixed unit costs, a further rise in gross margin indicates prices did not fall back.

Micron's guidance for the next quarter stays high. The company guided fiscal Q1 2027 revenue to $61.5 billion plus or minus $1.5 billion and non-GAAP gross margin to about 86.25% [1]. Management said about $1 billion of higher-cost inventory makes Q1 the low point for fiscal 2027 gross margin, with improvement in later quarters, and that most 2027 high-bandwidth memory (HBM) supply has been contracted at significantly higher prices [2]. All of this is company guidance; prices themselves were still not disclosed directly.

Cash grew along with profit. Fourth-quarter adjusted free cash flow was $33.199 billion, compared with $18.304 billion in the third quarter, and cash and investments at year end were $73.48 billion [1]. The company plans to step up share repurchases starting December 9 [2].

Capex came in on plan and roughly doubles in fiscal 2027

Micron completed its capital spending on guidance, and next year's spending rises sharply. Fiscal 2026 net capital expenditure was $27.37 billion, in line with the roughly $27 billion expected [1][5], and depreciation and amortization rose only 13.8%. The company expects about $25 billion of capital spending in the first half of fiscal 2027 and more in the second half, with a larger share going to clean room construction; it did not restate the timing of first wafer output at the ID1 fab [2]. Most of the new capacity will ship after mid-2027.

Conclusion

The results strengthen the case on growth and cash generation and push the main risks further out. Prices are still supporting a gross margin near 87%, and the agreements plus deposits already received give part of revenue a contractual floor. The limits are just as clear: price and volume were not split out, the agreements have not been through a price decline, and the doubled capital spending will enter depreciation after 2028. The next tests are whether the annual report discloses minimum contracted revenue, whether gross margin recovers after Q1, and whether new capacity becomes supply before the price cycle turns.

Sources

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