Micron Technology (MU) released its Q3 earnings, with revenue up 346% year-over-year, earnings per share (EPS) up over 10 times year-over-year, and gross margin reaching 85%. CEO Sanjay Mehrotra stated during the earnings call that on-device AI, combined with pent-up hardware replacement demand, will drive memory demand growth for PCs and smartphones. Management said the memory shortage will last at least until 2028.
Micron Q3 Earnings: Four Key Data Points
Key quantitative data from the quarter are as follows:
Revenue Growth: Up 346% year-over-year
Earnings Per Share (EPS): Up over 10 times year-over-year
Gross Margin: 85% (directly reflecting pricing power from memory supply-demand imbalance)
Operating Margin: 80% (pre-tax profit as a percentage of revenue)
Memory Shortage Duration: Management stated in the earnings call that it will last at least until 2028
Apple Stock Declines: Memory Costs Push Up Device Prices
The impact of the memory shortage has directly transmitted to consumer electronics. Apple announced on Thursday that it would raise prices for some laptops and tablets to cope with rising memory and storage costs, causing its stock to drop 5%. Hyperscale data center operators that form Micron's data center customer base are also facing higher memory procurement costs.
To date, AI deployment has primarily focused on data centers, supporting cloud-based applications such as OpenAI's ChatGPT and Anthropic's Claude.
CEO Mehrotra's Edge AI Narrative on the Q3 Earnings Call
Micron CEO Sanjay Mehrotra said on the Q3 earnings call: "Over time, we expect the value of on-device AI, combined with pent-up hardware replacement demand, to drive memory demand growth for PCs and smartphones."
Management also noted that the expansion of AI will cover on-device scenarios such as smartphones, high-end PCs, automotive, industrial applications, and robots — which are the main markets for Intel (INTC), AMD (AMD), Arm Holdings (ARM), and Qualcomm (QCOM).
Global Market Insights predicts that the global edge AI market will grow from its current $30.9 billion to $225.5 billion by 2035, with a compound annual growth rate of 24.7%. Arm holds a 99% share of the global smartphone CPU market, and Qualcomm also generates most of its revenue from smartphones. Both companies are covered in the scenarios explicitly mentioned in Micron management's edge AI narrative.
Frequently Asked Questions
What is the basis for Micron management stating that the memory shortage will last at least until 2028?
Micron's Q3 gross margin of 85% and operating margin of 80% directly reflect the memory supply-demand imbalance driven by AI demand. Management explicitly stated on the earnings call that the shortage will last at least until 2028, providing medium-term support for its pricing power and profitability.
What is the direct link between Apple's stock falling 5% on Thursday and Micron's earnings?
Apple's announcement to raise prices on some laptops and tablets coincided with Micron's earnings, both directly related to rising memory and storage costs. Apple's price hike is a concrete manifestation of memory shortage costs being passed on to consumer electronics terminals.
What is the source of the narrative that Intel, AMD, Arm, and Qualcomm benefit from edge AI?
Micron CEO Mehrotra explicitly mentioned on the Q3 earnings call that the booming AI scenarios will cover smartphones, high-end PCs, and other consumer electronics devices, and these four companies are the main chip suppliers for those device markets. The above narrative is a direct statement from Micron management on the earnings call.
