Micron is releasing its earnings tonight, and the stock price has already risen 300%— is there still room to grow? Three overlooked variables.

$Micron Tech(MU.US) $NVIDIA(NVDA.US)  $Sandisk(SNDK.US)

Conclusion first: Micron ($Micron Tech(MU.US)) will release its Q2 FY2026 earnings after the market closes tonight (FY stands for fiscal year, Micron's fiscal year starts every September). The stock closed at $461.69, up 55% year-to-date and 313% over the past year—this gain is second only to NVIDIA in the semiconductor sector. Wall Street is almost unanimously bullish: 26 analysts give a "Buy" rating, only one gives a "Hold," with the highest target price at $525. This earnings report is important not because of the Q2 data itself (which is likely to be strong), but because it will answer a key question: Does the $461 price still have room to go higher?

First, understand: What exactly does Micron sell?

Micron is one of the world's top three memory chip manufacturers (the other two are Samsung and SK Hynix from South Korea). It mainly sells two things: DRAM (Dynamic Random-Access Memory, the memory sticks in computers and servers) and NAND (flash memory, the storage chips in phones and SSDs).

The core reason for Micron's surge over the past year is: explosive demand from AI data centers for a high-end DRAM called HBM (High Bandwidth Memory). HBM is the essential "companion chip" next to NVIDIA's GPUs—the GPU handles computation, while HBM feeds data to the GPU at ultra-high speeds. The larger the AI model, the more HBM is needed. Micron's entire HBM production capacity for 2026 has already been sold out and locked in through multi-year contracts.

What Wall Street expects: Full optimism

Management's guidance last quarter was: Q2 revenue around $18.7 billion, gross margin (profit per $100 sold) around 68%, EPS (earnings per share) around $8.42. But Wall Street's consensus has been revised upward across the board: revenue expectations of $19.0-$19.8 billion, EPS expectations of $8.52-$9.19—all higher than management's own guidance.

The options market (a tool used by large funds to hedge risk) is pricing in a volatility of ±10%, meaning people expect the stock to either rise 10% (to $507) or fall 10% (to $415) after the earnings report. This volatility expectation is far higher than Micron's average post-earnings volatility of ±5.5% over the past four quarters.

So the question is—is $461 expensive?

On the surface, using this year's full-year expected earnings, the PE (Price-to-Earnings ratio, stock price ÷ earnings per share) is only about 11-12x. That's not considered expensive among tech stocks.

But memory chips are cyclical stocks—the PE looks cheapest when profits are highest because the denominator (earnings) is surging. The real question is: How long can this level of profit be maintained? The $461 price implies three assumptions: HBM supply shortages last until 2027, DRAM prices don't fall back, and the 68% gross margin can be maintained for several quarters. All three assumptions hold true now, but the scenario where they all hold has already been priced in at $461.

Three overlooked variables

Variable one: The GTC conference just revealed a brand new line of DRAM demand. NVIDIA launched a standalone rack called Vera CPU at GTC last week (a rack is the cabinet holding equipment in a data center), specifically for AI Agent (artificial intelligence assistant) data processing. This is NVIDIA's first pure CPU rack, with customers including Meta, Alibaba, and ByteDance. This CPU-side DRAM demand is a completely new incremental demand—not replacing HBM, but adding another demand line on top of HBM. This signal hasn't entered any analyst's model yet, but it will only start contributing to revenue in the second half of this year.

Variable two: Capital expenditure increased from $18 billion to $20 billion, future depreciation pressure. Micron raised this year's capital expenditure (money spent on building factories and buying equipment) from $18 billion to $20 billion last quarter. Expanding production capacity is good, but once new equipment is operational, annual depreciation must be recorded (spreading the equipment cost over annual expenses). Estimated over a 5-year depreciation period, annual depreciation expenses for FY2027-2028 will be $3-$4 billion higher than now. If revenue growth slows by then, depreciation will directly squeeze the gross margin. A 68% gross margin is a cyclical peak, not a long-term level.

Variable three: Three out of the past four quarters saw "good earnings but stock price decline." This is the pattern for cyclical memory stocks—people buy in the good news early, and sell after the earnings report confirms it. How much Q2 beats expectations isn't important; what truly determines the direction tonight is Q3 guidance: If gross margin guidance can still be maintained at 68%+, $461 holds; if it drops to 66%-67%, even if Q2 beats expectations significantly, there will be a short-term pullback of 10%-15%.

How should you view this earnings report?

If you already hold Micron, focus on management's wording regarding Q3 gross margin and DRAM price trends during the conference call tonight. If Q3 gross margin guidance is 68%+ and full-year revenue guidance is raised above $75 billion, the holding thesis remains unchanged.

If you don't have a position yet, $461 is not a good entry point to chase. The options market pricing of ±10% means big money is also hesitant. A more rational approach is to wait for the earnings report to pass and watch for two signals: ① Does it rise or fall after-hours? ② If it falls, can it stabilize around $415-$420 (near the annual moving average)? If so, that's a better entry point than $461.

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Do you think after Micron's 300%+ rally, the memory supercycle is only halfway through, or has it already entered the second half?