US stocks rose before the bell on Wednesday, eyeing a return to their record-setting rally as Alibaba's (BABA) spending plans and Micron Technology's (MU) results lifted prospects for an AI boom. Nasdaq 100 futures (NQ=F) moved up roughly 0.3%, while those on the S&P 500 (ES=F) nudged 0.1% higher. Contracts on the Dow Jones Industrial Average (YM=F), which includes fewer tech stocks, were broadly flat. A turnaround in tone on techs is helping stocks shape up for a slight comeback, after the major gauges ...

Financial Data and Key Metrics Changes - The company reported a gross margin above 50%, marking the highest level since mid-fiscal 2022, with DRAM margins also higher than that period [40][41] - The operating margin is the highest since November 2018, driven by improved market conditions and pricing [40][41] - The company expects second quarter gross margin to increase relative to the first quarter [42] Business Line Data and Key Metrics Changes - The NAND business is improving, with a focus on higher-value SSD products, although it remains below 2022 levels [40] - The company is transitioning from $13.8 billion in net capital expenditures in 2025 to approximately $18 billion in 2026, primarily for DRAM construction and equipment [13] - The company is exiting the managed NAND segment to concentrate on the data center market, which is expected to yield better ROI [11][87] Market Data and Key Metrics Changes - The demand for NAND SSDs in servers and data centers is expected to increase significantly in calendar 2026, driven by large hyperscalers needing more storage for AI deployments [8][9] - The average capacities for SSDs are anticipated to escalate rapidly, with high-capacity drives becoming more common in AI servers [54] - The DRAM industry is currently tight, and this is expected to further tighten in 2026 due to robust demand and limited supply growth [38] Company Strategy and Development Direction - The company aims to leverage its strong position in the data center SSD market and has announced a new product portfolio to capitalize on this [9] - The focus is on disciplined investments and maximizing ROI across its product portfolio, particularly in HBM and DRAM segments [17][20] - The company is being thoughtful about long-term agreements with customers, considering factors like U.S. manufacturing and potential tariff impacts [85][86] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving NAND industry conditions and the tightness in the DRAM market, which is expected to continue [9][40] - The company anticipates that the HBM business will have a higher through-cycle ROI compared to non-HBM DRAM [19][20] - Management highlighted the significant shift towards data center demand, which is driving pricing and profitability across all market segments [66] Other Important Information - The company is ramping its one-gamma DRAM production, which is expected to be the primary source of bit growth for fiscal 2026 [45] - The company has achieved significant improvements in HBM3E yields and is well-positioned for the HBM4 market [62][75] - The company is not providing specific margin details by product line but expects strong ROI capabilities for HBM products [47][48] Q&A Session Summary Question: State of the NAND industry and pricing expectations - Management indicated that the bits down in the current quarter are noise based on segment mix and that demand from hyperscalers will drive future growth [8][9] Question: CAPEX guidance and spending allocation - The company confirmed that the increase in CAPEX is primarily for DRAM construction and equipment, with little additional NAND spending [13][27] Question: HBM market share aspirations - Management expects to gain higher market share in HBM compared to previous years, driven by strong product performance and customer demand [17][24] Question: Gross margin outlook and contributing factors - Management noted that improving market conditions and pricing are key factors driving gross margin improvements, with expectations for continued growth [40][41] Question: Transitioning to one-gamma DRAM - The company is pleased with the one-gamma ramp and expects it to provide significant bit growth in fiscal 2026 [45] Question: Long-term agreements with customers - Management acknowledged interest in long-term agreements but emphasized the need for careful consideration of pricing and value creation [85][86] Question: Impact of exiting managed NAND on DRAM sales - Management confirmed that exiting managed NAND would not negatively impact DRAM sales, as strong relationships with customers remain intact [90]

Financial Data and Key Metrics Changes - The company reported a gross margin above 50%, the highest since mid-fiscal 2022, with operating margins also at their highest since November 2018 [32][33] - The company expects gross margins to improve further in the second quarter relative to the first quarter [33] Business Line Data and Key Metrics Changes - The NAND business is experiencing improved conditions, with expectations for tighter supply and increased demand driven by AI server deployments [6][7] - The DRAM segment is currently tight and expected to tighten further in 2026, contributing to improved pricing and margins [29][32] Market Data and Key Metrics Changes - The demand for high-capacity SSDs is increasing, with average capacities expected to escalate rapidly, particularly in AI servers [44] - The company anticipates significant growth in the data center segment, which has become a larger part of the total addressable market (TAM) and is driving overall profitability [54][55] Company Strategy and Development Direction - The company is focusing on enhancing its data center SSD business and has decided to exit the managed NAND market to improve overall ROI [9][71] - The strategy includes leveraging new product announcements and maintaining a strong competitive position in the data center SSD market [7][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for NAND and DRAM products, particularly due to the needs of hyperscalers for AI applications [6][7] - The company is optimistic about its ability to capture market share in HBM and expects to see higher share in HBM compared to previous years [13][18] Other Important Information - The company is investing significantly in DRAM construction and equipment, with CAPEX guidance increasing from approximately $13.8 billion in 2025 to about $18 billion in 2026, primarily for DRAM [11][19] - The company is ramping up production of one-gamma DRAM, which is expected to be the primary source of bit growth for fiscal 2026 [36] Q&A Session Summary Question: State of the NAND industry and pricing outlook - Management indicated that the bits down in the current quarter are noise based on segment mix and that demand from hyperscalers will drive NAND industry improvement [6][7] Question: HBM market share aspirations - The company expects to gain market share in HBM and is confident in its competitive positioning for HBM4, anticipating higher share compared to HBM3 [13][18] Question: CAPEX guidance and spending allocation - The majority of the increased CAPEX is directed towards DRAM construction and equipment, with minimal additional NAND spending [11][19] Question: DRAM revenue breakdown and margin contributions - Management clarified that while they do not provide specific margin comparisons, they expect tightening in the DRAM market to improve pricing and margins across the portfolio [29][32] Question: Long-term agreements with customers - There is interest in long-term agreements, but management is being cautious due to various market factors, including U.S. manufacturing and tariff implications [69][70] Question: Impact of exiting managed NAND on smartphone customers - Management confirmed that while customers may not be pleased with the exit from managed NAND, the strong relationship in DRAM remains intact [75]