Micron Q2 Revenue Nearly Doubles, but High Capital Expenditure Plan Raises Concerns as Stock Falls About 6% After Hours

After the Wednesday after-hours trading on the East Coast, U.S. memory chip giant Micron Technology released its latest quarterly earnings report.

The earnings show that for the second quarter of fiscal year 2026, ending in February, the company’s revenue nearly doubled, surpassing analyst expectations. Its guidance for the next quarter also significantly exceeded market forecasts.

However, in after-hours trading, the company’s stock price declined, falling about 6%. Over the past year, the stock has already increased by more than 350%.

Micron shares fell over 4% after hours

Below is a comparison of the company’s performance against the average analyst expectations from LSEG statistics:

Earnings per share: Adjusted to $12.20, expected $9.31

Revenue: $23.86 billion, nearly tripling from $8.05 billion a year ago, with an expectation of $20.07 billion

Gross margin (profit after deducting sales costs) based on U.S. GAAP increased more than twofold over the past year, from 36.8% to 74.4%, and also increased from 56% in the previous quarter.

Amid the AI boom, market demand for storage chips has surged, boosting Micron’s performance. CEO Sanjay Mehrotra stated in the earnings report:

“Our improved performance and outlook are driven by increased memory demand fueled by AI, structural supply constraints, and Micron’s excellent execution across all areas.”

For this fiscal quarter, the company expects revenue of about $33.5 billion, soaring from $9.3 billion a year earlier, with growth exceeding 200% and well above analyst expectations of $24.3 billion; adjusted earnings per share are projected at about $19.15, far surpassing the analyst forecast of $12.05.

Main risk: market expectations are too high

As the storage chip market heats up, Micron’s stock has soared like a rocket: in 2025, its stock price tripled, and by this Wednesday’s close, it has risen 62% since the start of the year.

“Looking at how these stocks traded before the earnings release, I believe the biggest risk is overly high investor expectations,” said Hendi Susanto, portfolio manager at Gabelli Funds. “However, the company’s guidance for the third quarter is strong, far exceeding analyst and my own expectations.”

Micron CEO Mehrotra said that global AI and traditional servers are currently facing “DRAM and NAND supply shortages.” Part of this is because many memory chip companies have shifted most of their production capacity to HBM chips, which offer higher profit margins.

Memory chip business generally falls into a lower-margin, commodity industry, with products priced lower than other chips and shorter contract durations. However, in recent months, many memory chip companies have signed longer-term contracts as semiconductor manufacturers strive to secure future capacity.

In its earnings report, Micron stated: “As AI develops, we expect computing architectures to become more dependent on memory… This is why we firmly believe Micron is the biggest beneficiary and driver of AI.”

Micron is massively expanding capacity

During the earnings call, Mehrotra said that production of NVIDIA’s Vera Rubin HBM4 graphics cards had already begun in the first quarter of this fiscal year, and the next-generation HBM4e products will start mass production in 2027. NVIDIA has also announced that its next-generation Feynman GPU will use custom HBM materials.

He added that capital expenditures in fiscal year 2027 will “increase significantly,” with construction-related costs exceeding $10 billion.

Currently, Micron is building two large new manufacturing campuses in Idaho and New York to boost its memory manufacturing capacity in the U.S.

Mehrotra said during the call that initial production at the Idaho plant is expected to be completed by mid-2027.

In January this year, Micron broke ground in New York to build a large campus valued at $100 billion, with wafer production expected to begin in the second half of 2028.

(Source: Cailian Press)