Summary of Micron Technology Inc Conference Call Company Overview - **Company**: Micron Technology Inc (MU) - **Industry**: Semiconductors Key Points and Arguments 1. **Supply Tightness Duration**: Micron has extended its view on the duration of supply tightness to persist through the end of 2026, indicating a fully booked HBM supply during this period [2][3][4] 2. **Profitability in DRAM**: Core DRAM profitability is expected to strengthen further, with DDR gross margins projected to surpass HBM for the first time in early 2026 [2][3] 3. **DDR5 Contract Negotiations**: Contract negotiations for DDR5 are trending towards a price increase of approximately 20% quarter-over-quarter, with mobile DRAM ASPs rising nearly 40% quarter-over-quarter [2][3] 4. **Market Dynamics**: The cycle is anticipated to be more durable as HBM technology is expected to "crowd out" traditional memory markets, with most capacity additions through 2027 likely directed towards HBM [2][3] 5. **Price Target Increase**: The price target for Micron has been raised to $275 from $245 based on revised pricing and HBM assumptions [2][4] Financial Estimates and Changes 1. **Revenue and EPS Estimates**: - FQ1 2026 revenue is estimated at $13.2 billion with EPS of $4.27, exceeding previous guidance [7][9] - FY 2026 revenue is projected at $65.9 billion and EPS at $25.51, reflecting a 3% increase from prior estimates [11] - FY 2027 revenue is expected to reach $81.5 billion with EPS of $33.33, a 7% increase from previous estimates [11] 2. **Gross Margin Projections**: Gross margins are expected to peak at approximately 66-67% in late 2026 and early 2027, with overall gross margins of 64.4% and 63.2% for FY 2026 and FY 2027 respectively [7][9] 3. **Capex Plans**: Micron plans to increase capital expenditures to $20.8 billion and $22.8 billion for FY 2026 and FY 2027, respectively, including around $2 billion in government incentives [7][9] Market Position and Competitive Landscape 1. **HBM Market Share**: Micron is expected to capture approximately 20-25% of the HBM market, despite challenges in ramping up production due to capacity constraints [3][6] 2. **Technology Development**: Commentary from Micron's CTO suggests that while the feasibility of HBM4 redesign is not an issue, the timing for completion is critical due to a lack of extensive IP library compared to logic foundries [3][4] Additional Insights 1. **NAND Pricing**: NAND pricing is expected to increase in the mid-teens for FQ1, but the second derivative may turn negative sooner in 2026 [7][9] 2. **Analyst Ratings**: The stock maintains a "Buy" rating with a 12-month price target of $275, reflecting strong market confidence [4][8] This summary encapsulates the critical insights from the conference call, highlighting Micron's strategic positioning, financial outlook, and market dynamics within the semiconductor industry.