United States chipmaker Micron Technology has answered mid-term market scepticism of the durability of the memory sector recovery with a record-breaking US$13.64 billion Q1 revenue that comfortably surpasses the "critical test" laid out by analysts earlier this week.
While pre-earnings commentary from IG suggested the company faced a pivotal moment to prove that the semiconductor upcycle could continue into 2026, actual results indicate that the AI-driven boom is accelerating rather than stalling.
Heading into the release, market observers had framed the report as a litmus test for the industry, questioning whether demand would stabilise or if pricing power could be maintained.
The answer? Micron's revenue jumped significantly from the $11.32 billion posted in the prior quarter and the $8.71 billion achieved during the same period last year.
GAAP net income reaching $5.24 billion - or $4.60 per diluted share - compared to just $3.2 billion reported in the previous quarter, and non-GAAP gross margins expanded to 56.8% - a substantial increase from the 39.5% recorded a year ago.
Markets were expecting revenue of $12.91 billion and earnings per share (EPS) of $3.96.
The company generated $8.41 billion in operating cash flow and $3.9 billion in adjusted free cash flow for the quarter, ending the period with $12 billion in liquidity.
AI remains the structural driver
High-bandwidth memory (HBM) and AI server demand were key structural growth drivers for the chipmaker.
Micron CEO Sanjay Mehrotra attributed the record-breaking performance to the company’s position as an "essential AI enabler", noting that the insatiable demand for AI-related hardware is supporting higher average selling prices and a far more profitable product mix.
While he cautioned that expectations were already elevated, Micron’s forward-looking guidance suggests that Wall Street may have actually underestimated the velocity of the current cycle, as the company is now forecasting an uplifted Q2 revenue of around $18.7 billion.
“Our Q2 outlook reflects substantial records across revenue, gross margin, EPS and free cash flow, and we anticipate our business performance to continue strengthening through fiscal 2026," Mehrotra said.
"Micron’s technology leadership, differentiated product portfolio, and strong operational execution position us as an essential AI enabler, and we are investing to support our customers’ growing need for memory and storage.”
At the time of writing, Micron Technology (NASDAQ: MU) stock was trading at US$243.50, up 7.6% in after-hours deals following Wednesday's close of $225.52. Micron Technology's market cap stands at $253.79 billion.
