Micron Projects 81% Margin, $25B CapEx and 5-Year Customer Deals
Micron guided 81% gross margin for Q4 2026 driven by AI demand and scaled HBM4 production, while projecting fiscal 2026 CapEx above $25 billion for cleanroom expansions. Supply constraints leave customers receiving only 50–67% of DRAM and NAND orders, prompting five-year strategic customer agreements for stability.
1. Strong Gross Margin Guidance
CFO Mark Murphy stated Micron’s 81% gross margin guide reflects AI-driven multi-year investment cycles and an increasing HBM4 mix, noting that incremental price increases will have limited effect at these levels.
2. Elevated Capital Expenditure Outlook
Micron plans fiscal 2026 capital spending above $25 billion, focused on cleanroom facility expansions; this heavy investment could pressure cash flow despite anticipated free cash flow growth.
3. Persistent Supply Constraints
Tight DRAM and NAND supply has led to customers receiving only 50–67% of their requested orders, with Micron prioritizing allocations across AI, data center, and consumer markets.
4. Five-Year Strategic Customer Agreements
New multi-year strategic customer agreements replace one-year LTAs, offering stability and demand visibility through confidential commitments designed to secure business in a tight supply environment.