Micron Technology will announce its financial results for the fourth quarter of fiscal year 2026 after the market closes on September 30th, Eastern Time. Prior to the earnings report, JPMorgan Chase, Morgan Stanley, Bank of America, Wells Fargo, Citibank, and D.A Davidson all maintain a positive rating, while Goldman Sachs maintains a neutral rating. The target prices set by these seven institutions range from $1,100 to $2,000; all expect strong performance this quarter, with the main disagreements focusing on how long the tight supply and demand situation for memory chips will continue and what valuation should be given to current profit margins.
Tomorrow's financial report: Consistent optimism that it will exceed expectations
Micron reported revenue of $41.46 billion in the last fiscal quarter, with earnings per share (EPS) of $25.11 based on non-GAAP (Generally Accepted Accounting Principles) criteria. The company provided guidance for the fourth fiscal quarter as follows: revenue of $50 billion, with a range of plus or minus $1 billion; gross margin of approximately 86%; and adjusted EPS of $31, with a range of plus or minus $1 dollar. Pre-discussion of the financial reports from seven institutions focused first on whether the actual results would exceed this guidance, as well as by how much the forecast for that quarter in November would be increased.
JPMorgan Chase maintains its overweight rating and target price of $1,540, expecting Micron's revenue, gross margin, and earnings per share in the fourth fiscal quarter to exceed market expectations, and also anticipates that the company will raise its guidance for that quarter in November. The bank believes that customer demand, the ongoing increase in HBM4 product sales, and the supply shortage that will continue into 2027 and even 2028 will support future pricing.
Citi maintains a buy rating, raising the target price from $1,150 to $1,300. The bank forecasts revenue and earnings per share for the fourth fiscal quarter at $51 billion and $31.45 respectively, and has raised its expectations for both August and November quarters. This is based on the fact that the DRAM price performance has been stronger than previously estimated; Citi also expects that AI demand and supply constraints will continue to result in a shortage in the DRAM and NAND markets.
Even among the seven most cautious institutions, Goldman Sachs expects Micron to report strong quarterly results. For its fourth fiscal quarter, it forecasts revenue of $51.9 billion, earnings per share of $32.54, and a gross margin of 87.3%, all of which are higher than Micron's previous guidance targets. Goldman Sachs maintains a neutral rating and a target price of $1,100, while paying attention to whether long-term additional supply, long-term customer agreements, HBM4 progress, and shareholder returns will be able to support a higher valuation.
Positive outlook on ongoing demand; there is still a significant gap from the target price.
D.A. Davidson has set the highest target price. Analyst Gil Luria reiterated a buy rating and a target price of $2,000 on September 28, expecting Micron's performance to exceed market expectations. He believes that the demand for memory capacity and speed as per the AI model continues to grow, and Micron's long-term supply agreements with customers also enhance the visibility of future business; his target price is based on a valuation of 13 times the expected earnings per share over the next 12 months.
Morgan Stanley also maintains its overweight rating, but the target price is $1200. The bank believes that demand and prices remain strong in the near term, and the market may continue to raise profit forecasts after the financial reports; however, compared to the previous quarters, the increase this time may be smaller. As for how long the strength in the storage industry can continue, the bank feels that a single set of financial reports is not sufficient to provide a definitive answer.
Wells Fargo's adjustment further reflects this divergence: the bank has lowered its target price from $1,525 to $1,400, yet maintained its overweight rating, and increased its earnings per share forecasts for Micron for the fiscal years 2027 and 2028 by more than 10%. Wells Fargo expects that tight storage supply will continue to support recent performance, but believes that the market will continue to discuss the duration of peak earnings and high profit margins.
Gross margin, capital expenditure, and long-term agreements become the focus of the next round
Bank of America maintains a buy rating and a target price of $1,550. Analyst Vivek Arya believes that the key data in the financial report is Micron's outlook for gross margin and capital expenditure for the fiscal year 2027: if the gross margin can be maintained at around 85%, the market's forecast for earnings per share of $150 to $200 for that fiscal year will be supported. The bank expects Micron's capital expenditure for the fiscal year 2027 to be in the mid-to-high range of over $40 billion, of which a considerable portion will be used for building cleanrooms, which may not immediately translate into increased production.
Long-term customer agreements are also an important basis for determining whether profits can be sustained. Micron previously stated that multi-year strategic customer agreements help to improve the stability and predictability of performance. JPMorgan Chase and D.A Davidson place more emphasis on the visibility of demand brought by these agreements; Wells Fargo focuses on the expansion and execution of these agreements; while Bank of America believes that contracts can mitigate cyclical fluctuations, but long-term profitability ultimately depends on AI capital expenditure requirements.
Seven institutions are generally optimistic about this quarter's performance, yet their target prices differ by $900. The key to these financial reports lies not only in how much the fourth quarter exceeded expectations but also in Micron's assessments for the gross margin, capital expenditures, supply growth, and long-term orders for the fiscal year 2027.
