87% vs 75%: Micron Now Out-Margins Nvidia. Is Memory the New Nvidia?
Micron's gross margin hit 86.8% on $54.23 billion of quarterly revenue, above Nvidia's 75.0%, and customers have put up $32 billion to reserve supply. Here is why memory got this scarce, and the dates when new supply arrives.
Micron just posted a gross margin 12 points above Nvidia's, and customers are paying cash upfront to reserve its supply. The history of memory says watch the factories before calling it permanent.
HeyTheo Research · Tuesday, October 6, 2026
Quick Read
Micron's fiscal Q4 (ended Sept 3) revenue was $54.23 billion, up from $11.32 billion a year earlier. That is 4.8 times in twelve months.
Its GAAP gross margin hit 86.8%. Nvidia's latest quarter ran at 75.0%. On net margin, Micron also leads, about 70% to 62%.
Customers are paying to reserve supply. Committed future orders stand near $150 billion, backed by $32 billion of customer commitments, mostly cash deposits.
The open question is supply. Micron guided about $25 billion of capex for the first half of fiscal 2027, close to all of last year's spend. Its first new fab starts output in mid-2027.
The milestone, and why it is the smaller story
Micron crossed $1 trillion in market value in late May, on a single-session jump of about 19%. It was worth about $1.2 trillion at the start of October.
The path between those two points was not smooth. Within days of a record fiscal Q3 report in late June, memory stocks sold off hard. By late July, Micron's shares sat about 28% below their high. Revenue kept setting records the whole time.
That is the first thing to know about this stock. In memory, the share price moves on fear of the next turn in the cycle, well before the reported numbers show one.
The bigger story arrived on Sept 30 with the fiscal Q4 report. Memory, a business long treated as a commodity, is now earning margins above the most celebrated chip franchise in the market.
Metric | Micron (fiscal Q4, ended Sept 3) | Nvidia (fiscal Q2, ended July 26) |
|---|---|---|
Revenue | $54.23B | $96.2B |
Revenue a year earlier | $11.32B | ~$46.7B |
GAAP gross margin | 86.8% | 75.0% |
GAAP net income | $37.70B | $59.7B |
Net margin | ~69.5% | ~62.1% |
Next-quarter revenue guide | $61.5B (+/- $1.5B) | $108.0B (+/- 2%) |
Implied sequential growth | ~13% | ~12% |
Source: Micron and Nvidia quarterly earnings releases. Net margin and implied growth are desk calculations from reported figures.
Two read-throughs from the table. Nvidia still sells almost twice the dollars per quarter. But on each dollar it sells, Micron now keeps more. And both companies are guiding to roughly the same sequential growth.
One line in the outlook deserves a second look. Micron guides its adjusted gross margin to about 86.25% next quarter, a touch under the 87.0% it just reported. It is a small step. It is also the line that turns first in a memory cycle.
Why memory got this expensive
Training and running large AI models is limited less by raw compute than by how fast data can be fed to the chips. High-bandwidth memory (HBM) sits stacked next to each accelerator to do exactly that. Every new generation of AI chip carries more of it.
Supply has not kept up. Micron says it has agreements in place for the vast majority of its calendar 2027 HBM supply, at significantly higher prices than this year. One industry forecast has average HBM prices more than doubling in 2027.
Here is the part most coverage skips. HBM is not where Micron earns its fattest margin. Regular memory is. Making HBM uses more silicon wafer per bit, which starves the supply of ordinary server, PC and phone memory and pushes those prices up. So the shortage shows up across the whole business, not just one product.
Business unit (fiscal Q4) | Revenue | Gross margin |
|---|---|---|
Core Data Center | $18.00B | 90% |
Cloud Memory | $16.28B | 83% |
Mobile and Client | $13.11B | 90% |
Automotive and Embedded | $6.82B | 84% |
Source: Micron fiscal Q4 2026 earnings release
The two data center units together brought in about $34.3 billion, close to two-thirds of the quarter. The unit selling phone and PC memory earned a 90% gross margin, above the cloud unit.
Is memory the new Nvidia?
On margins, this quarter, yes. On durability, the answer depends on a difference between the two businesses.
Nvidia's edge is design plus software. Customers build on its software tools, and switching away takes years. Its margin rests partly on being hard to replace.
Micron's edge is scarcity plus contracts. Memory chips from Micron, SK Hynix and Samsung are broadly interchangeable once qualified. Prices are high because there is not enough supply. That has been true before, and every past memory boom ended the same way: the industry built too much, and prices fell hard.
What is different this time is the contract book. Micron has signed 26 long-term supply agreements, which it estimates cover more than 35% of its revenue through 2030. Committed future orders stand near $150 billion, up from about $100 billion a quarter earlier. Customers have backed those agreements with $32 billion of financial commitments, most of it cash deposits. Management said more than three-quarters of fiscal 2027 shipments are already spoken for.
Buyers do not prepay for something they expect to be plentiful. That does not repeal the memory cycle. It does make the next downturn slower to arrive and easier to see coming.
What would break the thesis
The desk watches supply, not demand, for the turn. Management expects memory to stay tight through calendar 2027 and 2028 and says it has no line of sight to when supply and demand balance. The same report shows the supply response has begun.
Capex is stepping up. Micron spent about $27.4 billion in fiscal 2026. It guides about $11.5 billion for fiscal Q1 and roughly $25 billion for the first half of fiscal 2027, with the second half higher. That points to full-year spending above $50 billion, close to double. It is still modest against cash flow: capex was about a quarter of operating cash flow in fiscal Q4.
New capacity now has dates. See the table below. Rival suppliers are building too.
Contract pricing. Any sign of flat or falling contract memory prices is the earliest warning.
Inventory. Micron's own inventory rose to 129 days, up nine in the quarter, and management expects it to fall. Rising stockpiles at cloud and PC makers would mean buying ahead, not buying for use.
The rivals report next. Samsung's preliminary third-quarter numbers are due Thursday, Oct 8.
The dollar. Semiconductors earn about two-thirds of revenue abroad. With the dollar index at its highest since early 2025, currency is a small but real drag on reported growth. We covered that in our note on the dollar and the S&P 500.
When | New Micron capacity |
|---|---|
Early 2027 | Singapore HBM facility, initial output |
Mid 2027 | Idaho fab 1, first wafers. Taiwan (Tongluo), first shipments |
Second half of 2028 | Singapore NAND facility, output begins |
Late 2028 | Idaho fab 2, first wafers. Japan DRAM expansion, initial output |
2030 | New York fab, first wafers |
Source: Micron fiscal Q4 2026 prepared remarks. Timing is company guidance and can change.
Read the two halves of that table differently. The 2027 additions take several quarters to reach meaningful volume. The late 2028 wave lands just as management's own tight-supply window ends.
Rules HeyTheo tracks
AI memory basket. Memory and storage makers tracked as one group against the accelerator names, to see whether the market is paying more for the scarce part or the famous one.
Margin trigger. A trigger fires on any quarter where gross margin falls more than 3 points from the prior quarter. In memory, margin rolls over before revenue does.
Capex-to-cash trigger. Flags when a supplier's capex rises above half its operating cash flow. Micron's ran at about a quarter in fiscal Q4.
Ask Theo. Try: "Compare Micron's and Nvidia's gross margin over the last eight quarters" or "How did Micron trade after the last time its gross margin fell quarter over quarter?"
Check the rule behind any trigger before acting on it. You trade through your own broker; HeyTheo helps you decide.
This note extends our running AI capex thread. The money hyperscalers commit to data centers is now landing in memory as much as in accelerators.
The Shortage Clause
Micron is not the new Nvidia. It is something the market has rarely seen: a memory maker priced like a franchise because the shortage has lasted long enough to look like one, and because customers are now paying in advance to stay inside it.
The numbers this quarter are real. The question to keep asking is whether the contracts hold once the new fabs open. The answer will show up in the margin line, one quarter at a time.
FAQs
When did Micron reach a $1 trillion market value?
In late May 2026, after a single-session rise of about 19%. The shares then fell about 28% from their high by late July before recovering. Micron was worth about $1.2 trillion at the start of October.
How does Micron's profit margin compare with Nvidia's?
In its fiscal Q4 2026, Micron reported an 86.8% GAAP gross margin. Nvidia's fiscal Q2 2027 gross margin was 75.0%. Micron's net margin was about 69.5% versus about 62.1% for Nvidia.
What is HBM and why does it matter?
High-bandwidth memory is stacked memory placed beside AI accelerators to feed them data quickly. AI chips need more of it each generation. Micron says the vast majority of its calendar 2027 HBM supply is already under agreement.
How much future demand has Micron locked in?
Micron has signed 26 long-term supply agreements and reports about $150 billion of remaining performance obligations. Customers have made $32 billion of financial commitments, most of it cash deposits.
Why is memory considered a cyclical business?
Memory chips from different makers are largely interchangeable. When prices are high, suppliers add capacity, and the extra supply has historically pushed prices down sharply.
Sources
Micron, Nvidia, SEC filings, TrendForce, Seoul Economic Daily, Yahoo Finance, Kalkine Media, CompaniesMarketCap, Goldman Sachs
Disclaimer
Disclaimer: HeyTheo is a research and education platform, not an investment adviser or broker-dealer. Nothing here is advice to buy, sell, or hold any security. You trade through your own broker; HeyTheo helps you decide. Backtested results are hypothetical and do not guarantee future returns. References to governments, officials, or policies are for market context only and are not political endorsements. All investing involves risk, including loss of principal. Data is as of the dates noted.