Micron to Provide Strong Signal: Memory Shortage to Extend Through 2028, AI Boom to Reshape Cycle Narrative

BlockBeats News, June 25th - Micron revealed in today's early morning earnings call that its strategic customer agreements have increased from 1 in the previous quarter to 16, covering approximately 20% of DRAM shipment volume and about 1/3 of NAND shipment volume; of which 14 agreements are priced at the minimum contract price, with the remaining term generating cumulative revenue of approximately $100 billion. CEO Sanjay Mehrotra stated that these agreements will "fundamentally change" the business model. The key point of this news is that the market will reposition Micron from a highly cyclical memory stock to an AI infrastructure supplier with stronger revenue visibility.

In the earnings call, Micron disclosed that it expects the industry's tight state to continue beyond 2027, and even if the supply gradually improves by 2028, it is still unclear when the supply will catch up with the demand. Management attributed the reason to the large, complex, and time-consuming scale of constructing new fabs.

CFO Mark Murphy mentioned that DRAM revenue increased by 343% year-over-year to $31.3 billion, NAND revenue increased by 361% year-over-year to $9.9 billion; DRAM prices rose in the low-60% range, and NAND prices in the mid-80% range. He explained that the significant earnings beat in this quarter's financial report was mainly relying on pricing power and supply-demand imbalance, rather than purely on shipment volume.

The company expects capital expenditures of approximately $10 billion this quarter, around $27 billion for FY2026; capital expenditure in FY2027 will be higher than in FYQ4, with more than half of it going towards cleanroom construction. However, the CFO also mentioned that free cash flow for this quarter is expected to continue to increase significantly.

Overall, the content of this earnings call conveyed to the market the signal of "continued memory shortage + willingness of customers to sign long-term agreements + prices still have room to rise." This led to MU surging nearly 16% in after-hours trading, hitting a new all-time high of $121.3, driving up the entire storage sector.