Micron Q4/2026 Earnings: The Gross Margin Forecast That Will Move the Stock

On June 24, 2026, Micron Technology issued a gross margin forecast of around 86% for the fourth quarter of fiscal year 2026, with results to be published on September 30, 2026. For comparison: In the third quarter (ended May 28, 2026), the memory chip manufacturer achieved a non-GAAP gross margin of 84.9% – the new forecast implies a further increase of 1.1 percentage points. According to The Motley Fool, historically no memory chip manufacturer has sustained such a margin level over extended periods.

Q4 Forecast: Revenue $50 Billion, Margin 86%

For the fourth quarter of fiscal year 2026, Micron projects revenue of $50.0 billion (±$1.0 billion) and adjusted earnings per share of $31.00 (±$1.00). Gross margin is expected to be around 86%, with operating expenses at approximately $1.65 billion. The forecast is based on around 1.15 billion outstanding shares, as Micron disclosed in an SEC filing dated June 24, 2026.

CFO Mark Murphy stated in prepared remarks during the Q3 earnings call on June 24, 2026: "Our outlook for gross margin in the fourth fiscal quarter reflects a significant slowdown in the rate of price increases." This statement suggests that the pricing dynamics for memory chips – previously the primary driver of margin expansion – are losing momentum.

Record Quarter Q3 as Starting Point

The Q4 forecast follows an exceptionally strong third quarter that Micron reported on June 24, 2026. Revenue surged 346% year-over-year and 74% sequentially to $41.46 billion. Non-GAAP gross margin improved 45.9 percentage points year-over-year and 10.0 percentage points sequentially to 84.9%. Adjusted earnings per share climbed 1,215% year-over-year to $25.11.

DRAM chips – memory modules used primarily in servers and AI applications – accounted for 76% of revenue. DRAM revenue reached $31.3 billion, up 343% year-over-year and 67% sequentially. Operating cash flow (adjusted) nearly tripled to $18.30 billion.

Why Margins Are So High

The exceptionally high gross margins in Q3 and Q4 stem from two factors: pricing power and cost reduction. Memory chip prices rose sharply across the industry through September 2026, driven by demand from the AI sector and for high-capacity server DRAM modules. Simultaneously, Micron reduced production costs through the deployment of more advanced manufacturing nodes (node shrinkage). In a preview from June 23, 2026, management had projected a gross margin of 81% for Q3 to be achieved through "pricing power and node cost reduction."

New fab ramp-up costs – expenses for bringing new production facilities online – amount to $100 to $200 million per quarter according to Micron. At current revenue levels, these costs are largely immaterial.

Doubts About Sustainability

Despite the impressive figures, doubts are mounting as to whether Micron can sustain this margin level beyond the fourth quarter. The Motley Fool noted on September 27, 2026, that investors "should pay even closer attention to the gross margin guidance for the first quarter of fiscal year 2027." The memory chip industry is historically volatile, and current margins lie far above the industry's long-term average values.

CFO Murphy's statement about a "significant slowdown in the rate of price increases" suggests that the margin contribution from price increases is waning. Should memory chip prices stabilize or decline, margins could fall – unless Micron can further accelerate cost reduction.

Strategic Customer Contracts as Stabilizer

In the third quarter, Micron announced it had signed 16 multi-year strategic customer agreements (SCAs). These contracts with customers from data center, consumer, and automotive sectors include minimum purchase volumes through the end of 2030 and cumulative minimum revenue of approximately $100 billion. Customer deposits and financial commitments total $22 billion. The agreements are intended to reduce typical industry volatility and provide Micron with long-term planning certainty.

Market Reaction and Outlook

As of September 26, 2026, Micron stock had gained over 500% cumulatively in the preceding twelve months, reflecting market confidence in sustained demand for memory chips and the company's profitability. The publication of Q4 results on September 30, 2026, will show whether Micron actually achieves its ambitious margin targets.

However, for the stock's further development, the Q4 result itself may be less decisive than the outlook for the first quarter of fiscal year 2027. Should Micron signal that margins will decline significantly or pricing momentum continues to slow, this could put valuation under pressure. Conversely, a confirmation of high margins for Q1 FY2027 as well would support the thesis that Micron has entered a new era of sustainable profitability.