AKYLA
Equity Research
Semiconductors & Related Devices
Initiation of Coverage — BUY
Last Updated: June 28, 2026
Micron Technology, Inc. (MU)
Memory is no longer a commodity: SCAs, HBM and three-player supply discipline underwrite a path to 2x by mid-2028.
Thesis
- The FQ3'26 print is a regime change, not a cyclical bounce. Revenue of $41.46B (+74% QoQ, +346% YoY) on a record 84.9% non-GAAP gross margin, with FQ4 guided to ~$50B at ~86% GM and ~$31 EPS, reflects an industry that is now supply-determined. Mehrotra: demand 'continues to significantly exceed industry supply ... we expect tight conditions to persist beyond calendar 2027.'
- The 16 Strategic Customer Agreements structurally de-commoditize memory. 14 of 16 carry ~$100B cumulative minimum-price revenue commitments over a 5-year, non-cancelable take-or-pay term, backed by ~$22B of cash deposits and financial commitments (~$18B cash). Management expects ~half of company revenue under SCAs, with floor-price gross margins 'well above our peak quarterly margins in any past cycle.'
- HBM is the differentiator and it is sold out. >$1B HBM4 already shipped, HBM4 12-high ramping ~2x faster than HBM3E 12-high, with custom logic base dies (HBM4E on a TSMC node) turning DRAM into a design-win business. HBM is fully booked through CY2027 into 2028; Micron is deliberately holding HBM share near its DRAM share to protect non-HBM supply.
- Supply is structurally constrained in a disciplined three-player industry. Greenfield fabs are 'large, complex and time-consuming'; the HBM trade ratio and slowing per-node bit gains pressure non-HBM bits. Management has 'no line of sight as to when memory supply will be able to catch up with increasing demand,' with only gradual relief in 2028.
- PATH TO 2x: At ~$1,132 the stock trades at only ~12x the ~$98 FY2027 consensus EPS. A double does not require heroics — it is available via (a) re-rating toward a low-20s P/E as SCAs prove durability, and/or (b) FY2028 EPS growth on a $50B+/quarter run-rate. We anchor a base-case target of ~$2,250 (~$2.6T market cap, ~2x today), bridged below and corroborated by UBS's $1,625 and the >$1T re-rating framing.
Disclaimer
This is not financial advice.
This report is for informational purposes only and is not investment advice.