On June 24, 2026, Micron Technology reported fiscal third-quarter revenue of $41.46 billion, up 346% from $9.30 billion a year earlier, with a GAAP gross margin of 84.6% and net income of $28.24 billion. Those numbers are extraordinary on their own, but they are not the point. The point is the line underneath them: cost of goods sold went from $5.79 billion to $6.40 billion — up 10.5%. Micron sold roughly the same kind of silicon it sold a year ago, at roughly the same cost to produce, and collected four and a half times as much money for it. This is not an efficiency story or a product story. It is a price story, and the ledger shows it with uncomfortable clarity.
The Headline Numbers
Micron's fiscal Q3 2026 ended May 28, 2026. Every line below is GAAP, taken from the company's 10-Q.
| Metric | Q3 FY2026 | Q3 FY2025 | YoY Change |
|---|---|---|---|
| Revenue | $41,456M | $9,301M | +345.7% |
| Cost of goods sold | $6,400M | $5,793M | +10.5% |
| Gross margin ($) | $35,056M | $3,508M | +899.3% |
| Gross margin (%) | 84.6% | 37.7% | +46.9 pts |
| Research and development | $1,316M | $965M | +36.4% |
| Selling, general & admin | $407M | $318M | +28.0% |
| Operating income | $33,318M | $2,169M | +1,436% |
| Operating margin | 80.4% | 23.3% | +57.1 pts |
| Income tax provision | $4,978M | $235M | +2,018% |
| Net income | $28,243M | $1,885M | +1,398% |
| Diluted EPS | $24.67 | $1.68 | +1,368% |
Read the first three rows together and the quarter explains itself. Revenue grew 4.5x. The cost of producing that revenue grew by about a tenth. The entire $31.5 billion increase in gross profit came from the gap between those two rows — in round terms, roughly 98 cents of every incremental revenue dollar fell straight through to gross profit. There is no cost-reduction program in the world that produces a 46.9-point margin expansion in twelve months. Only pricing does that.
The operating expense lines confirm it. R&D rose 36% and SG&A rose 28% — real increases, the kind a company makes when it is investing into a boom, but rounding errors against a 346% revenue gain. Operating expenses consumed 13.8% of revenue a year ago; this quarter they consumed 4.2%. Micron's cost base simply did not participate in the revenue event.
One number that is not a price artifact: the tax bill. Micron paid $4.98 billion at a 15.0% effective rate on $33.2 billion of pre-tax income. A year ago it paid $235 million. Cash taxes are the first real cost of a supercycle.
Revenue Deep Dive: All Four Business Units, All at Once
Micron reports four business units. Unusually, there is no laggard — every one of them roughly quadrupled.
| Business Unit | Q3 FY2026 Revenue | Q3 FY2025 Revenue | YoY | Q3 FY2026 Operating Income |
|---|---|---|---|---|
| Cloud Memory (CMBU) | $13,769M | $3,386M | +306.6% | $10,793M |
| Core Data Center (CDBU) | $11,524M | $1,530M | +653.2% | $9,519M |
| Mobile and Client (MCBU) | $11,521M | $3,255M | +254.0% | $9,873M |
| Automotive and Embedded (AEBU) | $4,634M | $1,127M | +311.2% | $3,493M |
| All Other | $8M | $3M | — | $3M |
| Total | $41,456M | $9,301M | +345.7% | $33,318M |
The two data-center units — Cloud Memory and Core Data Center — together produced $25.3 billion, or 61% of revenue, and that is the AI story everyone expects. Core Data Center's 653% growth is the single fastest line in the report.
The more revealing unit is Mobile and Client. Phones and PCs are not an AI story; they are the consumer end of the memory market, and a year ago that business was barely profitable — $3,255 million of revenue against $2,467 million of cost, a 24.2% gross margin. This quarter MCBU booked $11,521 million of revenue against $1,463 million of cost: an 87.3% gross margin, the highest of any Micron business unit, higher than the data-center units chasing HBM. Nothing changed about phones. What changed is that DRAM is scarce everywhere, so the price of a commodity mobile memory part now clears at a level that makes it more profitable than the exotic stuff. When the cheapest, most competitive corner of your market is your best margin, you are not looking at a technology moat. You are looking at a shortage.
By technology, the mix is the familiar one:
| Technology | Q3 FY2026 | Q3 FY2025 | YoY | % of Revenue |
|---|---|---|---|---|
| DRAM | $31,328M | $7,071M | +343.0% | 75.6% |
| NAND | $9,943M | $2,155M | +361.4% | 24.0% |
| Other (primarily NOR) | $185M | $75M | +146.7% | 0.4% |
NAND grew slightly faster than DRAM, which matters because NAND has historically been the weaker, more oversupplied half of Micron's business. Both halves inflating at once is the signature of an industry-wide supply shortage rather than a product-specific win.
The Margin Story
Micron's own history is the best commentary available on its present. Here are five fiscal years and the current quarter, straight from the ledger:
| Period | Revenue | Gross Margin % | Operating Margin % | Net Margin % | Net Income |
|---|---|---|---|---|---|
| FY2021 | $27,705M | 37.6% | 22.7% | 21.2% | $5,861M |
| FY2022 | $30,758M | 45.2% | 31.5% | 28.2% | $8,687M |
| FY2023 | $15,540M | −9.1% | −37.0% | −37.5% | −$5,833M |
| FY2024 | $25,111M | 22.4% | 5.2% | 3.1% | $778M |
| FY2025 | $37,378M | 39.8% | 26.1% | 22.8% | $8,539M |
| Q3 FY2026 | $41,456M | 84.6% | 80.4% | 68.1% | $28,243M |
FY2023 is the row to stare at. Revenue fell 49% in a single year and gross margin went negative — Micron's cost of goods sold ($16,956M) exceeded its revenue ($15,540M), because inventory written down below cost still has to flow through COGS. The company lost $5.8 billion. That was three years ago, in this same business, with substantially this same cost structure and the same customers.
The mechanical explanation for both extremes is identical: memory is a fixed-cost manufacturing business selling an undifferentiated commodity. Fabs cost the same to run whether DRAM sells for $2 or $8. When price is above cash cost, nearly all of the price increase becomes profit. When price falls below it, the losses arrive just as fast. The 84.6% gross margin and the −9.1% gross margin are the same business model observed at two points in the cycle. Micron did not become a different company in between.
The One Big Question: Is This Price or Is This Position?
Everything about the bull case for Micron reduces to one question — whether the current pricing reflects a structural shift in memory demand (AI infrastructure needs more DRAM per server, permanently) or a temporary supply-demand gap that competitors will close.
The evidence for structural is real. HBM4 is in high-volume production. The data-center units are 61% of revenue. Management signed what it calls multi-year Strategic Customer Agreements, which CEO Sanjay Mehrotra said "will significantly enhance durability and predictability" of financial performance — a direct attempt to convert spot-market pricing into contracted revenue, and the single most important strategic action in the quarter.
The evidence for cyclical is in the income statement. An 84.6% gross margin on a commodity product is, historically, an invitation. It tells every competitor with a fab — Samsung, SK Hynix — and every competitor considering one that memory is the most profitable manufacturing business on earth right now. Supply responds to that signal. It always has. Micron itself is responding: nine-month capital expenditures were $19.6 billion, and property, plant and equipment on the balance sheet has grown from $46.6 billion at fiscal year-end to $56.4 billion in nine months. Every player adding capacity into a shortage is, mathematically, building the next glut.
Guidance says the squeeze has not peaked. Micron guided fiscal Q4 to $50.0 billion of revenue (±$1.0 billion), a gross margin near 86%, and GAAP diluted EPS of $30.73 (±$1.00). If that lands, Micron will have grown revenue from $9.3 billion to $50.0 billion in five quarters.
The honest answer is that both things are true at different time horizons: AI demand is a genuine step-change in how much memory the world consumes, and 84.6% margins on commodity DRAM will not survive the capacity that those margins are currently financing. The interesting question is not whether margins normalize but where they normalize — and whether the contracted agreements hold the floor meaningfully above the old cycle's.
Tracking a $134 Billion Company in Plain Text
Double-entry accounting is unforgiving in a useful way: every dollar has to come from somewhere and land somewhere, and the books do not close until it does. Modeling Micron in Beancount forces the pricing story into the open, because the income statement must sum to zero.
In Beancount, income is recorded as a negative (credit) amount and expenses as positive (debit) amounts; net income is the balancing figure. Here is Micron's fiscal Q3 2026, exactly as it appears in the open ledger:
; FY2026 Q3 Income Statement — three months ended May 28, 2026
; Revenue: 41,456 | CoGS: 6,400 | R&D: 1,316 | SG&A: 407
; OtherNet: 112 (net other EXPENSE) | Tax: 4,978 | Net Income: 28,243
; Check: −41,456 + 6,400 + 1,316 + 407 + 112 + 4,978 + 28,243 = 0 ✓
2026-05-28 * "Micron Technology, Inc." "FY2026 Q3 Income Statement"
Income:Revenue -41456 MUSD ; +346% YoY (9,301), +74% QoQ (23,857)
Expenses:CostOfRevenue 6400 MUSD ; gross margin 35,056 = 84.6% GAAP
Expenses:ResearchAndDevelopment 1316 MUSD
Expenses:SellingGeneralAdministrative 407 MUSD
Expenses:OtherNet 112 MUSD
Expenses:IncomeTax 4978 MUSD ; 15.0% effective rate
Equity:Adjustments 28243 MUSD ; net income offsetNow put the trough beside it. This is the same company, the same accounts, three years earlier:
; FY2023 Income Statement — fiscal year ended August 31, 2023
; Check: −15,540 + 16,956 + 3,114 + 920 + 206 + 177 − 5,833 = 0 ✓
2023-08-31 * "Micron Technology, Inc." "FY2023 Income Statement"
Income:Revenue -15540 MUSD ; down 49% YoY
Expenses:CostOfRevenue 16956 MUSD ; exceeds revenue: gross margin −9.1%
Expenses:ResearchAndDevelopment 3114 MUSD
Expenses:SellingGeneralAdministrative 920 MUSD
Expenses:OtherNet 206 MUSD
Expenses:IncomeTax 177 MUSD ; tax expense despite a pre-tax loss
Equity:Adjustments -5833 MUSD ; net LOSS offsetTwo transactions, same ledger, same Expenses:CostOfRevenue account. In FY2023 that account was larger than revenue. In Q3 FY2026 it is 15% of revenue. Nothing else in the structure changed.
The balance-sheet line that tells the story is retained earnings:
2026-05-27 pad Equity:RetainedEarnings Equity:Adjustments
2026-05-28 balance Equity:RetainedEarnings -94682 MUSDMicron ended fiscal 2025 with $48,583 million of retained earnings — the accumulated profit of its entire history since 1978, net of every loss and dividend along the way. Nine months later that figure is $94,682 million. In three quarters, Micron earned slightly more than it had retained in the previous forty-seven years combined.
The rest of the balance sheet moved with it. Cash and equivalents went from $9.6 billion to $25.0 billion; total assets from $82.8 billion to $134.1 billion; total equity through $100 billion for the first time. And long-term debt fell from $14,017 million to $5,140 million — Micron used the cash to retire its 2028, 2029, and 2030 notes outright. A company that borrowed to survive FY2023 has spent this boom deleveraging.
The Multi-Year Arc
| Fiscal Period | Revenue | Gross Margin % | Net Income | Diluted EPS | PP&E (net) |
|---|---|---|---|---|---|
| FY2021 | $27,705M | 37.6% | $5,861M | $5.14 | $33,213M |
| FY2022 | $30,758M | 45.2% | $8,687M | $7.75 | $38,549M |
| FY2023 | $15,540M | −9.1% | −$5,833M | −$5.34 | $37,928M |
| FY2024 | $25,111M | 22.4% | $778M | $0.70 | $39,749M |
| FY2025 | $37,378M | 39.8% | $8,539M | $7.59 | $46,590M |
| FY2026 (9 months) | $78,959M | 76.6% | $47,268M | $41.40 | $56,426M |
Two things compound in this table, and they are not the same thing. Profit is violently cyclical: five years produce $5.9B, $8.7B, −$5.8B, $0.8B, $8.5B — and then $47.3B in nine months. Property, plant and equipment is not cyclical at all: $33.2B → $38.5B → $37.9B → $39.7B → $46.6B → $56.4B, up every year including the year Micron lost $5.8 billion. That is the memory business in two rows. The fabs get built regardless; only the price of what comes out of them changes. Depreciation on $56.4 billion of PP&E is a fixed cost that will still be there when DRAM pricing is not.
The Verdict: Bull vs. Bear
Bull Case
- Incremental economics are almost perfect: revenue +$32.2B YoY against +$0.6B of additional COGS. Roughly 98% of each new revenue dollar reaches gross profit.
- Guidance implies acceleration, not a peak: $50.0B revenue and ~86% gross margin for fiscal Q4, with GAAP EPS of $30.73 versus $24.67 this quarter.
- The balance sheet has been de-risked in real time: long-term debt $14.0B → $5.1B, cash and investments of $30.2B, total equity above $100B.
- Demand is broad, not narrow: all four business units grew 250%+, and NAND (+361%) outpaced DRAM (+343%).
- It is self-funding: nine-month operating cash flow of $45.7B covers $19.6B of capex more than twice over, so the capacity build requires no leverage.
- Multi-year Strategic Customer Agreements are an explicit attempt to convert spot pricing into contracted revenue — if they hold, the next trough is shallower than FY2023.
Bear Case
- The margin is a price, not a moat. COGS rose 10.5% while revenue rose 345.7%; nothing about Micron's cost structure or technology improved by 47 margin points.
- This exact ledger contains the counterexample: FY2023, revenue −49%, gross margin −9.1%, a $5.8B net loss — in the same business, three years ago.
- An 84.6% commodity gross margin is a capacity signal to every competitor with a fab, and supply has always answered it.
- The best margin in the company is in mobile and client (87.3%), the least differentiated segment. That is a shortage rent, and shortage rents expire.
- The fixed-cost base is being ratcheted up into the boom: PP&E $46.6B → $56.4B in nine months, and depreciation on it does not fall when prices do.
- Receivables of $31.0B now sit on the balance sheet against a customer base concentrated in a handful of hyperscalers — a credit exposure that did not exist at this scale a year ago.
Our Take
This is the best quarter in Micron's history and it is a cyclical peak — those statements are not in tension, and the ledger is what makes that legible. The correct way to read an 84.6% gross margin on a commodity is not as evidence of a moat but as a measurement of how badly the market is short of DRAM, and that shortage is currently financing the capacity that will end it. What is genuinely different this time is the demand driver: AI infrastructure consumes memory per unit of compute in a way that PCs and phones never did, and the Strategic Customer Agreements are a real attempt to lock that in. So we expect the normalization to land above the old floor rather than at it — Micron's next trough should look more like FY2024's $778 million of net income than FY2023's $5.8 billion loss. But investors extrapolating $30 of quarterly EPS into perpetuity are pricing a semiconductor company as though it had discovered a subscription business. It has not. It has discovered a shortage, and it is diligently building the cure.