MU: Results and Guidance Crushes Expectations; Persistent Undersupply to Drive Further Memory ASP Hikes

We previewed MU's earnings in our Weekly Report, and mentioned that 'We actually believe that by the third quarter of this year, we could see an $80 run-rate EPS.' . Now MU guided $20EPS.

Micron’s financial results for FY2Q26 (Feb-26) crushed all expectations as revenue reached $23.9bn (vs. Street consensus of $19.2bn and buy-side consensus of $20.1bn), representing a 75% QoQ and 196% YoY increase. Non-GAAP gross margin hit a record high of 75%, and diluted EPS was $12.2, far exceeding the Street consensus of $8.6 and buy-side consensus of $10.5. Furthermore, the company generated record free cash flow of $6.9bn and the Board approved a 30% increase in the quarterly dividend to $0.15/share, signaling confidence in sustained business strength and cash generation. The outlook for the next quarter is even more remarkable, with FY3Q (May-26) revenue guidance at $33.5bn ± $750mn (vs. buy-side consensus of $26.4bn), gross margin guidance at 81.0% (vs. buy-side consensus of 74.8%), and EPS guidance of $19.15 ± $0.40 (vs. buy-side consensus of $14.81), driven by higher pricing, lower costs, and a favorable product mix.

Supply Shortage Persists Beyond 2026