Apart from the strikingly excellent Q3 numbers, what captured the imagination of Wall Street were Micron's (MU) set of Strategic Customer Agreements, or SCAs. Spanning across industries, 14 out of 16 of these “take or pay” agreements have a minimum contracted revenue value of $100 billion over their terms, and $22 billion has already been secured in cash deposits and financial commitments. Notably, the company expects these commitments to represent half of its revenues soon.
Now, in its latest earnings call, Micron has outed the name of one key customer: General Motors (GM).
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www.barchart.com Bound by Memory
Under the terms of the expanded partnership, the automaker will make use of Micron's memory and storage platforms for better vehicle production. Commenting on the development, CEO Sanjay Mehrotra said, "Our expanding manufacturing efforts in the United States are designed to enable GM to deliver both near-term products as well as secure U.S.-based supply to support next-generation platforms and innovation."
While the conference call lacked specifics, a press release earlier this month went into greater detail. Essentially, the wider objective of the deal for General Motors is to secure a supply of memory in the future without disrupting its production process. Certain memory components, such as LPDRAM (Low-Power DRAM) for localized, high-speed compute processing, NOR Flash for reliable, near-instantaneous system boot-ups, and UFS NAND for high-capacity, ruggedized storage, are what General Motors will be primarily sourcing through this agreement from Micron.
Moreover, the supply agreement is tied to Micron's Manassas, Virginia, fabrication plant, which is being modernized with a $2 billion investment, alleviating any possible geopolitical issues. Other areas of focus will be system-level optimization of GM's future vehicle architectures, along with collaboration on the development of future products from the company's stable.
Broadly, the automotive market is a crucial one for Micron, especially now that AI-enabled cars are seeing growing acceptance by the day. While currently hovering around the $6 billion mark, the automotive memory market is projected to reach $14.2 billion by 2034. While Micron's calculations reveal that today's cars require about 90 GB of memory in 2025, this report reckons that it will more than triple this year.
Thus, Micron, with a 36% market share, is expected to be a natural beneficiary of this trend. However, it will be keen to regain its apex position, which it lost to Samsung, which has a 40% share.
Micron's Memorable Q3
Micron continued with its trend of posting outstanding quarterly results in Q3 as well.
The company delivered exceptional results in the third quarter with revenue reaching $41.46 billion, representing a remarkable 346% increase from the year-earlier period. Gross margins expanded sharply to 84.9% from 39% in the prior year quarter. This broad-based strength was evident across all major segments. The cloud business generated $13.8 billion with 306% year-over-year (YoY) growth and 58% gross margins, while the data center segment contributed $11.5 billion, up 667% with 38% margins. Mobile revenue stood at $11.5 billion, advancing 248.5% with 24% margins, and the automotive segment added $4.6 billion, rising 318.2% with 26% margins.
The company continues to demonstrate diversified momentum and is not overly reliant on any single area for expansion, even after implementing notable sequential price increases in the low 60s percent range for DRAM and mid 80s percent for NAND products.
Earnings per share surged to $25.11 from $1.91 in the year-ago quarter, substantially outperforming the consensus estimate of $20.86 and marking the ninth consecutive quarter of beating profit forecasts.
For the fourth quarter, Micron guided for revenue between $49 billion and $51 billion along with earnings per share in the range of $30 to $32, both ahead of current analyst projections.
A standout element in the results was the signing of 16 strategic customer agreements across data center, consumer, and automotive markets. These deals include $22 billion in total commitments, backed by $18 billion in cash deposits. This provides strong visibility and covers more than 80% of the planned $27 billion in capital expenditures for fiscal 2026.
The company also highlighted progress on its HBM4E memory architecture based on the advanced 1 gamma process node, with volume production targeted for 2027. This technology is designed to deliver meaningful gains in power efficiency and bandwidth, reinforcing Micron’s position as a critical supplier to major hyperscale operators and artificial intelligence chip developers.
For the nine months ended May 28, 2026, net cash from operating activities jumped to $45.7 billion from $11.8 billion in the comparable prior year period. Micron closed the third quarter with $25 billion in cash and minimal short-term debt of $582 million.
Finally, even following a significant rally, MU shares appear attractively valued. The forward P/E ratio of 13.30 times and P/CF multiple of 13.13 times sit below the respective sector medians of 24.79 times and 19.17.
Currently valued at a market cap of $1.1 trillion, MU stock has given up some of its recent gains, following a wider weakness in memory names globally. Yet, the stock is still up a substantial 251% on a YTD basis.
Analyst Opinion of MU Stock
Considering this, analysts remain optimistic on Micron, assigning its stock an overall rating of “Strong Buy.” The mean target price of $1,416.39 indicates an upside potential of 43% from current levels. Out of 41 analysts covering MU stock, 32 have a “Strong Buy” rating, five have a “Moderate Buy” rating, and four have a “Hold” rating.
www.barchart.com On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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