Micron Guided a Single Quarter to $50 Billion. The Stock Sits 24% Below Its High.

Micron Technology's (NASDAQ:MU) fiscal third quarter of 2026 (the period ended May 28, 2026) produced $41.5 billion of revenue. The company's entire fiscal 2025, its biggest year to that point, produced $37.4 billion. The memory specialist collected more revenue in 13 weeks than in its whole previous year.

Alongside that late-June report, Micron guided the fiscal fourth quarter to $50.0 billion of revenue, give or take $1.0 billion, with gross margin around 86%. The earnings guide is $31.00 per share, give or take a dollar, on a non-GAAP (adjusted) basis.

That implies nearly $36 billion of adjusted profit in a single quarter.

But the stock hasn't followed the numbers. The share price is around $950 as of this writing, and the 52-week high is $1,255, so the stock has given back about 24%.

A gap that wide, with results this strong, suggests investors doubt the earnings can hold.

Image source: Micron.

Three quarters of acceleration

The fiscal year opened with $13.6 billion of revenue in the first quarter. The second quarter brought $23.9 billion and the third $41.5 billion -- a period that produced just $9.3 billion a year earlier. Each revenue step has been bigger than the one before. Gross margin climbed alongside, from 57% to 75% to about 85% on an adjusted basis. And net income reached $28.2 billion in the latest quarter, up about 15-fold year over year.

Most of the demand is coming from artificial intelligence (AI) data centers. Micron's cloud memory unit generated $13.8 billion of fiscal third-quarter sales, about four times its year-ago total, and its core data center unit brought in $11.5 billion, up from $1.5 billion a year earlier. Together, that is more than half of the company's sales.

Even management has been guiding too low. In March, Micron guided the fiscal third quarter to about $33.5 billion of revenue at an 81% adjusted gross margin. The quarter finished more than $7 billion past the top of that range, at an 84.9% gross margin.

What does $50 billion assume?

The guided quarter is longer than the one it follows. Fiscal 2026 is a 53-week year, and the extra week falls in the fiscal fourth quarter (14 weeks against the usual 13).

The calendar alone accounts for about $3.5 billion of the step-up. Even stripping that out, the underlying weekly pace of revenue rises about 12%.

The rest is pricing. Not only would gross margin, at about 86%, sit about a point above the level just reported, but adjusted operating expenses are guided to only $1.65 billion. With expenses that small, most of each additional dollar of memory Micron sells falls through to profit.

As for how long that can continue, management points to its supply contracts.

"We believe our multi-year Strategic Customer Agreements will significantly enhance the durability and predictability of Micron's strong financial performance," CEO Sanjay Mehrotra said in the June earnings release.

Those strategic customer agreements are take-or-pay contracts: customers commit to set volumes for years and pay for them whether they end up needing them or not. The contracts are about how long the boom might last. The guide is about how big it has already become.

Investors are already pricing the peak

If the fiscal fourth quarter lands at the guide's midpoint, fiscal 2026 will close with about $129 billion of revenue, nearly 3.5 times fiscal 2025's total. GAAP earnings per share would land near $72, up from $7.59 the year before.

Growth like this usually commands a premium valuation. But Micron trades at about 21 times earnings. Measured against a full year at the guided quarter's pace, the stock costs about 8 times earnings. I think the second number is the more telling one. Investors are treating these profits as a cyclical peak -- and arguably with reason.

After all, this is the same business that lost $5.8 billion just three years ago. In fiscal 2023, the bottom of the last memory downturn, revenue fell by about half, to $15.5 billion.

Sure, nothing reported so far has turned. And the latest quarter finished well above the company's own forecast. The first official look at the 14-week quarter arrives on Sept. 30, when Micron reports results and should guide its first fiscal 2027 quarter.

Of course, stock prices look ahead, and memory pricing has always moved in cycles. Prices that soared this fast could fall fast, too, and the skepticism is aimed at next year, not at the quarter Micron is about to report.

Is a 24% discount on numbers like these a buying opportunity? I'd call Micron stock a hold at today's price.

If you already own shares, results like these are no reason to sell. But buying more here means believing this cycle winds down more gently than the last one did -- and I'm not there yet.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.