A month has gone by since the last earnings report for Micron (MU). Shares have added about 2.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Micron due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Micron Q2 Earnings Crush Estimates, Q3 Guidance Above Street View
Micron reported better-than-expected second-quarter fiscal 2026 results and provided strong guidance for the third quarter. The memory chipmaker reported second-quarter earnings of $12.20 per share, beating the Zacks Consensus Estimate by 38.57%. The company’s second-quarter earnings jumped 682% from the year-ago quarter’s $1.56 per share.
Micron Technology’s revenues soared 196% year over year to $23.86 billion and surpassed the Zacks Consensus Estimate by 21.67%. The top line was driven by robust demand for its high bandwidth memory (HBM) products.
Buoyed by the better-than-expected financial performance, Micron Technology issued strong guidance for the third quarter of fiscal 2026. The company’s forecast for the top and bottom lines was above the Zacks Consensus Estimate.
Micron Q2 Top-Line Details
Technology-wise, DRAM revenues of $18.8 billion, accounting for 79% of the total revenues in the fiscal second quarter, increased 207% year over year and 74% sequentially. The robust sequential increase was mainly driven by mid-single-digit growth in bit shipments and a mid-60s percentage rise in average selling prices. The company experienced strong demand for data center DRAM, boosted by solid growth in HBM and robust performance of high-capacity DIMMs and low-power server DRAM products.
NAND revenues of $5 billion, representing 21% of the total revenues, were up 169% year over year and 82% sequentially. The robust sequential increase was mainly driven by low single-digit growth in bit shipments and a high-70s percentage rise in average selling prices.
Other revenues were $95 million in the reported quarter, which increased from $75 million in the year-ago quarter and was up from $88 million in the previous quarter.
Previously, Micron used to report its business segments as follows: Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit and Storage Business Unit. Following the reorganization, its disclosure of business segments is as follows: Cloud Memory Business Unit, Core Data Center Business Unit, Mobile and Client Business Unit and Auto and Embedded Business Unit.
Business segment-wise, revenues of $7.75 billion from the Cloud Memory Business Unit soared 163% from the year-ago quarter and 47% sequentially, driven by an increase in prices and a favorable mix.
Revenues of $4.69 billion from the Core Data Center Business Unit grew 211% on a year-over-year basis and surged 139% on a quarter-over-quarter basis due to higher pricing and an increase in bit shipments.
The Mobile and Client Business Unit’s revenues were $7.71 billion, up 245% from the year-ago period and up 81% from the previous quarter, aided by higher pricing but partially offset by lower bit shipments. Revenues from the Auto and Embedded Business Unit totaled $2.71 billion, which increased 162% year over year and 57% sequentially, driven by higher pricing but partially offset by lower bit shipments.
Micron’s Q2 Operating Details
For the fiscal second quarter, MU posted a non-GAAP gross profit of $7.75 billion, up 486% year over year and 131% sequentially. The fiscal second-quarter non-GAAP gross margin of 74.9% improved from the year-ago quarter’s 37.9% and the previous quarter’s 56.8%.
Non-GAAP operating expenses were $1.42 billion compared with the previous quarter’s $1.33 billion and the year-ago quarter’s $1.05 billion.
Micron Technology’s non-GAAP operating income of $16.46 billion was higher than the previous quarter’s non-GAAP operating income of $6.42 billion. It also shows significant improvements from the year-ago quarter’s non-GAAP operating income of $2.01 billion.
The non-GAAP operating margin came in at 69%. Micron Technology posted a non-GAAP operating margin of 47% for the previous quarter, and it had a non-GAAP operating margin of 24.9% in the year-ago quarter.
Micron’s Balance Sheet & Cash Flow
MU exited the reported quarter with cash and investments of $16.7 billion compared with $12.02 billion at the end of the previous quarter. Its total debt, as of Feb. 26, 2026, was $9.56 billion compared with the $11.19 billion witnessed at the end of the previous quarter.
The company generated an operating cash flow of $11.9 billion in the fiscal second quarter. It spent $5 billion on capital expenditure in the quarter, resulting in an adjusted free cash flow of $6.9 billion. In the first half of fiscal 2026, the company generated operating cash flow and free cash flow of $20.31 billion and $10.81 billion, respectively.
MU paid out $132 million in dividends and repurchased shares worth $350 million in the second quarter of fiscal 2026. In the first half of fiscal 2026, it repurchased shares worth $650 million and paid $266 million in dividends.
Micron’s Q3 Outlook
MU provided its guidance for the third quarter of fiscal 2026. The company anticipates revenues of $35.5 billion (+/-$750 million) in the fiscal third quarter. For the fiscal third quarter, Micron Technology projects a non-GAAP gross margin of approximately 81%. Operating expenses on a non-GAAP basis are estimated to be approximately $1.4 billion. Adjusted EPS is anticipated to be $19.15 (+/- 40 cents).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 75.45% due to these changes.
VGM Scores
At this time, Micron has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Micron has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Micron is part of the Zacks Computer - Integrated Systems industry. Over the past month, Hewlett Packard Enterprise (HPE), a stock from the same industry, has gained 17%. The company reported its results for the quarter ended January 2026 more than a month ago.
Hewlett Packard Enterprise reported revenues of $9.3 billion in the last reported quarter, representing a year-over-year change of +18.4%. EPS of $0.65 for the same period compares with $0.49 a year ago.
Hewlett Packard Enterprise is expected to post earnings of $0.54 per share for the current quarter, representing a year-over-year change of +42.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hewlett Packard Enterprise. Also, the stock has a VGM Score of A.
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This article originally published on Zacks Investment Research (zacks.com).