Memory leader Micron opened semiconductor earnings season. FY25Q4 corresponds to June through August 2025.
Micron FY25Q4 Results:
Revenue of $11.32B, up 46% year over year and 22% sequentially, a new all-time high. FY26Q1 revenue guided at $12.5B, up 44% year over year and 11% sequentially, continuing sequential growth.
GAAP gross margin of 44.7%, up 7 percentage points sequentially. FY26Q1 gross margin guided at 50.5%, up 5.8 percentage points sequentially (GAAP gross margin peak was 61% in FY18Q4).
GAAP operating income of $3.65B, up 68% sequentially, operating margin of 32% (GAAP operating income peak was $4.3B in FY18Q4).
Operating cash flow of $4.61B, up 17% sequentially (operating cash flow peak was $5.2B in FY18Q4). Free cash flow positive for six consecutive quarters.
GAAP net income of $3.2B, up 70% sequentially; non-GAAP net income of $3.47B, up 59% sequentially. FY26Q1 GAAP net income guided at $4.02B, non-GAAP at $4.31B (GAAP net income peak was $4.33B in FY18Q4).
No share repurchases in the full FY25 fiscal year.
Business Segments:
DRAM revenue of $9.0B, up 69% year over year, eighth consecutive quarter of growth, up 27% sequentially, accounting for 79% of revenue. DRAM bit shipments up low-teens% sequentially; ASP up low-double-digits% sequentially.
NAND revenue of $2.3B, unexpectedly down 5% year over year, ending seven consecutive quarters of growth, revenue share falling to a historic low of 20%. NAND bit shipments down mid-single-digits% sequentially; ASP up high-single-digits% sequentially. This result seems at odds with the recent NAND price surge hype. Management explained the NAND industry will improve, but from a timing perspective, DRAM improvement will come earlier. In terms of supply tightness, the NAND market is improving and tightening, but the DRAM market is already very tight and will become even tighter. This also relates to Micron's own NAND product mix.
By End Market:
CMBU, represented by cloud customer DRAM and overall data center HBM, posted revenue of $4.54B, up 214% year over year and 34% sequentially, accounting for 40% of revenue, with gross margin of 59%, up 1.2 percentage points sequentially.
CDBU, represented by OEM data center DRAM and overall data center NAND, posted revenue of $1.58B, down 23% year over year and up 3% sequentially, accounting for 14% of revenue, with gross margin of 41%, up 4 percentage points sequentially.
MCBU, represented by smartphone/PC DRAM and NAND, posted revenue of $3.76B, up 25% year over year and 16% sequentially, accounting for 33% of revenue, with gross margin of 36%, up 0.12 percentage points sequentially.
AEBU, represented by automotive/industrial/consumer DRAM and NAND, posted revenue of $1.44B, up 17% year over year and 27% sequentially, accounting for 13% of revenue, with gross margin of 31%, up 5.4 percentage points sequentially.
2025 server shipments expected to grow 10% year over year (raised); AI training and inference demand continues to spread broadly; traditional servers also beginning to recover. Key data center products include HBM, high-density D5/LP5, and data center SSDs. FY25 data center revenue share 56%, gross margin 52%. FY25 data center high-density D5 and LP products combined revenue exceeded $10B. Data center LP DRAM single-quarter revenue up 50% sequentially. Micron remains the sole supplier of data center LP DRAM to NVIDIA. Data center SSD revenue and market share hit new highs. Data center HDD supply shortage boosting SSD demand. Company launched industry's first G9 data center NAND. Server SSD average capacity moving from 60TB to 120TB, with future aggressive adoption of 245TB.
HBM revenue this quarter near $2B, run-rate revenue near $8B. By comparison, SK hynix Q2 HBM revenue was ~$6.5B.
On products: 2026 HBM3E supply largely locked in, but HBM4 negotiations not yet completed; will lock in over the coming months. HBM4 (in-house logic die) sampled to customers, bandwidth >2.8TB/s, data rate >11Gbps (debunking rumors of not meeting NVIDIA standards). First shipments in 2026Q2, ramp in 2H 2026.2027 volume-production HBM4E logic die announced with TSMC partnership, enabling customization; custom versions carry higher gross margin than standard. Next quarter Micron HBM market share expected to match its DRAM market share (20%+); 2026 HBM market share expected to be higher.
2025 PC shipments expected to grow mid-single-digits% year over year (raised). Micron's first 1-gamma D5 volume production and shipment. Client SSD revenue hit a new high this quarter.
2025 smartphone shipments expected to grow low-single-digits% year over year (unchanged). Smartphone DRAM content continues to rise; this quarter 1/3 of flagship phones equipped with 12GB+ DRAM. 1-beta LP5X 16GB/24GB products completed customer validation. Future exit from smartphone NAND business, halt UFS5 R&D, focus on higher-ROI smartphone DRAM business. Smartphone customers have far fewer choices in DRAM than in NAND.
Auto and industrial demand recovery exceeded expectations this quarter. D4/LP4 product supply remains constrained; June-announced Virginia fab expansion supports customer D4/LP4 demand.
Earnings Call Highlights:
2025 DRAM bit demand growth expected at high-teens% (raised); NAND bit demand growth at low-to-mid-teens% (raised). 2025 DRAM/NAND bit supply growth below industry non-HBM and NAND averages. Mid-term DRAM/NAND bit demand CAGR at mid-teens% (unchanged).
2026 DRAM and NAND expected to remain in undersupply.
NAND process transition will make FY25 NAND capacity 10% lower than FY24. As HBM wafer consumption and wafer conversion ratios continue to rise (HBM3E consumes 3x wafers vs D5; HBM4 will consume more; HBM4E will consume >4x).
FY26Q1 capex guided at $4.5B, annualized near $18B, mostly HBM and other DRAM related.
Gross margin expected to continue rising; FQ1 and FQ2 gross margins can sustain sequential increases. DRAM days of inventory below 120-day target and will stay tight; NAND inventory also declining. Customer order lead times extending, visibility improving.
Overall, Micron's report was decent, but pre-report Bloomberg consensus being below official guidance was absurd. Two quarters ago the market worried about near-term data center SSD oversupply; recently structural capacity shortage has driven sustained price hikes and a reversal. With strong DRAM demand and HBM consuming significant DRAM capacity, non-HBM DRAM has also entered a price-hike cycle; management noted some product margins even exceed HBM.
But with Micron's valuation logic having shifted from cyclical to growth, the market needs more positive signals on HBM TAM upside; management did not deliver that this time. And HBM4 capacity has not sold out early as expected; the market expects buyers' bargaining power to be stronger than during HBM3. Long term, Micron's core growth pillars remain HBM, high-density D5/LP5, and data center SSDs.
Micron currently trades at 3.4x PB, far above the historical 1.8x PB range. Global HBM leader SK hynix at 3.0x PB (25Q2, 25Q3 possibly lower). Laggard Samsung Electronics at 1.3x PB (25Q2, 25Q3 possibly lower).