TLDR
- Micron delivered fiscal Q2 revenue of $23.9B with EPS of $12.20, surpassing consensus by 21% and 36% respectively
- Forward guidance for the May quarter projects $33.5B in revenue and $19.15 EPS, exceeding analyst expectations by 42% and 70%
- Q3 gross margin forecast reached 81% — outpacing Nvidia’s 75% margin
- Major firms including Citi and UBS increased price targets to $510, with Cantor Fitzgerald projecting $700
- Stock retreated approximately 4% in extended trading despite exceptional results, driven by capex worries and margin peak concerns
Micron Technology delivered what many consider its most impressive quarterly performance ever, yet shares moved lower. It’s a market reaction that catches even seasoned investors off guard.
The semiconductor memory specialist announced fiscal second-quarter revenue reaching $23.9 billion — representing a staggering 196% year-over-year surge and 75% quarter-over-quarter growth. The company’s adjusted earnings per share hit $12.20, marking a remarkable 682% climb compared to the same quarter last year.
These figures crushed Street expectations, topping revenue projections by 21% and earnings forecasts by 36%.
Chief Executive Sanjay Mehrotra highlighted that sales across DRAM, NAND, HBM, and every business segment reached all-time peaks. The ongoing artificial intelligence infrastructure expansion continues fueling unprecedented demand for advanced memory and storage solutions.
Yet despite this exceptional performance, MU shares declined roughly 4% during after-hours trading following the announcement.
Investors reacted negatively to two primary factors. First, Micron increased its capital spending forecast for fiscal year 2027. Second, market participants worried that gross profit margins might have reached their zenith — despite the 81% figure representing an exceptional achievement for any hardware company.
The stock had already climbed 354% over the previous twelve months leading into the earnings release, making some profit-taking virtually inevitable.
Analyst Reaction
Citi’s Atif Malik maintained his Buy recommendation while boosting his price objective to $510 from $430, emphasizing stronger-than-anticipated margins. He characterized the central question as whether MU can continue appreciating alongside DRAM pricing — powered by AI requirements and constrained fabrication capacity — or if pricing moderates following a robust first-quarter performance.
Malik did note potential near-term investor rotation toward semiconductor equipment manufacturers given the elevated capital expenditure outlook.
UBS’s Timothy Arcuri similarly increased his target to $510 from $475 while maintaining his Buy stance. He took a more cautious approach, observing that with gross margins now exceeding 80%, much of the potential upside from additional beat-and-raise quarters might already be incorporated into current valuations.
UBS additionally highlighted new extended-term customer contracts Micron secured, including one five-year agreement — exceeding UBS’s initial expectations. The firm interprets these arrangements as evidence that customers consider memory strategically essential.
Numerous other analysts joined with target increases. Cantor Fitzgerald established a $700 objective. Rosenblatt advanced to $600. Wolfe Research elevated its target to $550.
Outlook and Valuation
The May quarter projection emerged as the standout figure. Micron forecasted revenue of $33.5 billion with EPS of $19.15 — surpassing consensus estimates by 42% and 70% respectively.
Gross margin guidance landed at approximately 81%, climbing from 38% in fiscal 2025’s third quarter and 75% in fiscal 2026’s second quarter.
On a forward price-to-earnings metric, MU currently trades at merely 8x — an unusually low multiple for a company experiencing this growth trajectory. However, certain analysts interpret a single-digit forward multiple on a cyclical semiconductor stock as a cautionary signal rather than an attractive entry point, since the market frequently prices in peaks well before they materialize.
UBS maintains a historical perspective that Micron typically reaches its valuation peak approximately nine months before peak margins arrive.
As of the latest trading session, MU changed hands at $443.52 before retreating to $395.14.
