TLDR
- Micron’s Q3 revenue reached $41.46 billion, representing a 346% year-over-year increase, while EPS of $25.11 exceeded analyst expectations by more than $4.
- CEO Sanjay Mehrotra explained to Jim Cramer that the memory chip supply crunch is structural in nature rather than cyclical, with new fabrication facilities not operational until 2027ā2028.
- Both HBM3E and HBM4 memory products are completely sold out through 2027, supported by $22 billion in advance customer deposits from hyperscalers.
- The company has delivered over $1 billion worth of HBM4 products and asserts technological superiority over competitors SK Hynix and Samsung in DRAM and NAND sectors.
- Shares of MU currently trade around $970, having declined from a 52-week peak of $1,255, while maintaining an approximately 244% gain year to date.
Micron Technology (MU) shares are hovering around $970, representing a decline from the 52-week high of $1,255 reached on June 25, yet maintaining an impressive 244% year-to-date rally. Despite the recent pullback, the fundamental narrative remains intact ā a point CEO Sanjay Mehrotra emphasized during his June 30 appearance on Jim Cramer’s Mad Money.
Cramer posed the question on every investor’s mind: when will the memory shortage resolve? Mehrotra’s response was direct and unambiguous.
“The industry requires greenfield capacity. This means constructing entirely new clean rooms. Such clean rooms require substantial time from initial groundbreaking to producing the first wafers.”
Micron’s inaugural Idaho fabrication plant will begin wafer production by mid-2027, with full-scale production ramping primarily throughout 2028. A second Idaho facility becomes operational by late 2028. The New York manufacturing site follows thereafter. The implication is clear: the supply constraint will persist for years.
Cramer had previously characterized Micron’s Q3 performance as among the most significant earnings surprises he’s witnessed. The data supports this assessment. Revenue totaled $41.46 billion, surging 346% year over year from $9.30 billion. Non-GAAP EPS reached $25.11, compared to analyst estimates of $20.78. Free cash flow achieved a company milestone at $18.30 billion.
The Q4 outlook proves even more remarkable: $50 billion in projected revenue, approximately 86% gross margins, and anticipated EPS of $31.00.
The HBM4 Milestone
Both HBM3E and HBM4 memory products have zero available capacity through calendar 2027, with customer commitments already extending into 2028. Major hyperscale cloud providers have deposited $22 billion in advance payments to guarantee supply allocation.
During the earnings conference call, Mehrotra revealed that Micron had delivered over $1 billion in HBM4 shipments. This figure represents more than just revenue ā it demonstrates technological capability. HBM4 ranks as the most sophisticated memory product to manufacture globally, and Micron stands as the sole U.S.-based producer operating at commercial scale.
When Cramer directly questioned whether Micron has surpassed SK Hynix and Samsung technologically, Mehrotra responded definitively: “Regarding both DRAM and NAND technology, we maintain clear technology leadership.” The company’s patent portfolio now encompasses approximately 65,000 patents.
Cramer also highlighted the valuation opportunity. Even after the substantial rally, MU trades below eight times earnings.
The U.S. Manufacturing Push
Micron has allocated $200 billion toward U.S.-based manufacturing and research and development initiatives, targeting the creation of over 90,000 jobs. Additionally, the company is investing $300 million in developing domestic semiconductor workforce capabilities through apprenticeship programs, community college partnerships, and university collaborations.
Cramer referenced Morris Chang’s assertion that U.S. chip manufacturing costs run 50% higher than Taiwanese operations. Mehrotra countered by highlighting Micron’s established Manassas, Virginia facility, which currently manufactures advanced memory products for automotive, defense, medical, and aerospace applications.
Regarding consumer markets, Mehrotra acknowledged that AI data center demand is constraining supply availability for smartphone and PC memory, resulting in elevated consumer device prices. He indicated that Micron deliberately maintains approximately 40% of its business in consumer segments to preserve portfolio diversification.
MU trades at $970 as of July 2, with fourth-quarter guidance projecting $50 billion in revenue and $31.00 in EPS.
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