Micron Technology (MU): JPMorgan expects Micron to beat August-quarter expectations again as memory pricing, HBM4 mix and SCA coverage strengthen.

Overview

This pre-earnings report argues that Micron enters its August-quarter F4Q26 release with several routes to exceed expectations, supported by resilient memory pricing, high-end HBM4 product mix and tightening supply-demand conditions. JPMorgan also highlights expanding supply commitment agreements and the post-December 2026 capital-return framework as important supports for a more durable earnings and margin profile.

Core views

JPMorgan expects Micron's F4Q26 August-quarter results to exceed Street expectations for $51.4B of revenue, 86.2% gross margin and $31.73 of EPS. The report expects pricing to remain robust even though management had flagged a meaningful moderation in the rate of increases. It interprets that moderation as a deliberate effort to preserve customer relationships and secure long-term supply commitment agreements (SCAs), rather than evidence of weaker demand. DRAM ASPs are forecast to rise more than 20% sequentially, while NAND ASPs are expected to increase by roughly 20% sequentially amid high-capacity enterprise SSD tightness. HBM4 12-high ramping should further improve mix, and data-center revenue is expected to set another record after exceeding an approximately $100B annualized run-rate in the May quarter. DC SSD revenue is expected to remain above $5B after more than doubling sequentially in May. The report expects the F1Q27 November-quarter guide to be the larger source of upside relative to consensus of $56.3B revenue, 86.5% gross margin and $35.71 EPS. Its reasoning rests on management's statement that customer demand signals have increased further, alongside a more forceful view that CY27 will be even tighter than CY26. Micron has raised its CY27 HBM total-addressable-market outlook to above $100B, while JPMorgan's global model estimates a $160B HBM TAM in CY27E and $282B in CY28E, based on blended ASP increases of 54% and 25%, respectively. The report also expects Micron's HBM share to move toward its overall DRAM share of about 23%, with initial contributions from newly signed SCAs adding pricing and volume visibility. JPMorgan rejects the view that HBM de-specification will cause a material price slowdown into CY27. Its supply-demand analysis estimates HBM shortages of 20% in CY26E, 19% in CY27E and 16% in CY28E even after accounting for de-specification; the accumulated deficit is projected to widen to 23 weeks by CY28E. The report therefore sees an upward bias to pricing through CY27-28 and expects November-quarter gross margin to remain in the mid-80% range or higher, aided by HBM4 12-high mix. A second central thesis is that SCAs could materially alter Micron's historically cyclical memory-business profile. In the May quarter, Micron disclosed 16 SCAs covering about 20% of DRAM volume and about 33% of NAND volume, with $100B of remaining performance obligations at floor pricing across 14 of the 16 agreements. Those agreements included $22B of cash and cash-like commitments, including $18B of cash deposits, of which about $10B was expected to reach the balance sheet in F4Q. Given subsequent management comments that more SCAs have been signed, JPMorgan's base case is that aggregate forward bit-production coverage has reached at least 35%, with a meaningful chance it already exceeds 50%. The upcoming earnings release and 10-K remaining-performance-obligation disclosure are expected to clarify contract pace, contracted RPO and deposit accumulation. At the agreements' floor pricing, the report says gross margins should remain well above Micron's prior-cycle peak of roughly 62%, creating a higher and more durable margin floor. The report also focuses on 9 December 2026, the second anniversary of Micron's CHIPS Act definitive agreements. After that date, Micron has committed to return 100% of excess cash to shareholders over time, with buybacks identified as the primary mechanism and modest dividend growth secondary. JPMorgan expects management to offer greater clarity on the program's timing, cadence and initial scale. It estimates August-quarter free cash flow above $24B, more than 30% higher than approximately $18.3B in May, and notes that cumulative FCF could approach $200B across the six quarters through year-end CY27. The institution views the combination of capital-return capacity and SCA-backed earnings visibility as a material value-unlock lever. For valuation, JPMorgan's $1,540 December 2027 target is based on applying a 10x price-to-earnings multiple, described as Micron's 10-year median P/E, to FY28E EPS of $154. Longer term, it expects broader product exposure across DRAM, NAND and NOR, plus data-center HBM, mobility, networking and cloud-computing demand, to reduce exposure to commodity-DRAM cyclicality.

Analysis framework

JPMorgan assesses near-term results against Street revenue, gross-margin and EPS expectations, then links pricing, product mix, bit supply and operating leverage to the earnings outlook. It uses an HBM supply-demand model to evaluate the pricing debate, examines disclosed SCA volumes, RPOs and deposits to judge revenue and margin visibility, and considers free-cash-flow capacity and CHIPS Act commitments in evaluating capital returns. The price target applies a historical median P/E multiple to projected FY28 EPS.

Methodology notes

• Industry AnalysisSupply-demand framework

  HBM supply-demand shortage analysis

  The report compares projected HBM supply with demand through CY28 to support its view that shortages should sustain pricing despite de-specification.

• Industry AnalysisVolume-price decomposition

  Memory ASP, bit shipment and product-mix analysis

  The report separates expected ASP increases, constrained bit-supply growth and HBM4 mix effects to explain revenue and gross-margin upside.

• Valuation methodsP/E and PEG Valuation

  P/E-based price target

  JPMorgan derives the $1,540 target by applying a 10x, 10-year median P/E multiple to FY28E EPS of $154.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Micron Technology (MU)

  Primary covered company; expected to benefit from memory-price momentum, HBM4 mix, SCA-backed visibility and capital returns.

  Strengths

  Expected DRAM and NAND ASP gains, accelerating HBM4 12-high ramp, record data-center revenue, SCA expansion and substantial free-cash-flow generation.

  Weaknesses

  Bit shipment growth remains constrained by Micron's and the industry's limited ability to increase supply.

  Comparison

  The report expects SCA floor-pricing margins to remain well above Micron's approximately 62% prior-cycle gross-margin peak.

  Risks

  Competitive execution, weaker PC demand, ASP declines, DRAM/NAND supply-demand imbalance, NAND demand changes and macro-driven demand softness.

Key data

• F4Q26 Street consensus$51.4B revenue / 86.2% gross margin / $31.73 EPSJPMorgan expects Micron to exceed all three measures in the August quarter.
• F1Q27 Street consensus$56.3B revenue / 86.5% gross margin / $35.71 EPSThe report expects management guidance to be well above these levels.
• HBM supply-demand gap-20% / -19% / -16%JPMorgan estimates shortages in CY26E, CY27E and CY28E, respectively.
• Accumulated HBM shortage23 weeks by CY28EEstimated after fully accounting for HBM de-specification.
• SCA coverage35%+ base case; potential 50%+Estimated forward bit-production coverage across DRAM and NAND, versus disclosed May-quarter coverage of about 20% for DRAM and 33% for NAND.
• May-quarter SCA disclosures16 SCAs; $100B RPO; $22B cash and cash-like commitmentsFourteen agreements carried floor pricing; commitments included $18B of cash deposits.
• Expected August-quarter free cash flow$24B+More than 30% above approximately $18.3B in the May quarter, according to the report.
• Valuation basis10x FY28E EPS of $154The 10x multiple is described as Micron's 10-year median P/E.

Impact & implications

JPMorgan argues that sustained memory shortages and expanding SCAs can make Micron's pricing and margins more durable than investors typically associate with a cyclical memory company. It sees the anticipated earnings and guidance upside, potential confirmation of higher SCA coverage, and post-9 December capital-return details as catalysts for recognizing that durability.

Risks

• Micron operates in highly competitive markets, making operational execution critical.
• A sudden deterioration in PC-demand expectations could reduce estimates for DRAM price recovery and memory-content growth.
• An aggressive ASP decline combined with weaker per-gigabit manufacturing-cost reduction could lower revenue and earnings estimates.
• A DRAM or NAND supply-demand imbalance could reduce revenue and earnings estimates.
• Further NAND supply-demand dislocation could change sector growth assumptions.
• Macroeconomic demand weakness could reduce demand for Micron products and pressure revenue and profitability.

What to watch

• F4Q26 revenue, gross margin and EPS relative to Street expectations of $51.4B, 86.2% and $31.73.
• F1Q27 guidance relative to consensus of $56.3B revenue, 86.5% gross margin and $35.71 EPS.
• Updates on SCA signings, aggregate RPO, cash-deposit buildup and the share of production under contract.
• Evidence on HBM4 12-high ramp, HBM market share and data-center and DC SSD revenue.
• Management detail on capital-return timing, cadence and initial buyback sizing after 9 December 2026.