Micron now has an 88% margin on consumer memory as price hikes drive profits — client business is Micron's only unit that shipped less memory this quarter
Micron's consumer business is also its most profitable one by margin.
Micron released its fiscal Q4 2026 financial results on Wednesday, expectedly setting another record for revenue with $54.23 billion for the quarter, up nearly five times since the same period last year. Micron also hit a record 87% gross margin, the largest contributor to which was Micron's Mobile and Client (consumer) business unit. Further, Micron's client business was the only one that shipped less memory last quarter, despite bringing in the highest operating margin at 88%.
Micron's margins overall are up significantly year-over-year; Core Data Center surged from 25% to 85%, and Automotive and Embedded have climbed from 20% to 79%. The Mobile and Client unit also saw significant growth, with a 29% operating margin in fiscal Q4 2025, and now a margin of 88%. Cloud Memory margins grew, though not to the same extent as other units, moving from 48% to 76%.
The gross margins are interesting to look at, too. In a financial statement, the gross margin equals revenue minus cost of goods. Operating margin, on the other hand, equals revenue minus cost of goods and all other operational expenses. The operating margin simply excludes taxes and interest.
The gap between gross and operating margin is what's interesting in the breakdown above. The Mobile and Client unit has the smallest gap, with only a 2% difference. The Core Data Center unit matches the Mobile and Client unit with a 90% gross margin, but it has a lower operating margin at 85%. In other words, the cost of running Micron's consumer business is extremely low relative to the amount of revenue it currently generates.
It also saw the lowest amount of growth for the quarter, with revenue up 14% quarter-over-quarter. Micron says this was "driven by higher pricing, partially offset by lower bit shipments." Out of Micron's four business units, the Mobile and Client unit was the only one that shipped less memory in the past quarter.
For clarity's sake, a bit shipment is just a shipment. Micron measures shipments in bits rather than units. It's the capacity Micron has shipped in a quarter, not the actual number of DRAM or NAND chips.
Outside of Mobile and Client, Micron attributes higher revenue to higher pricing and bit shipments. The situation in the Mobile and Client unit echoes a sentiment we've heard elsewhere: growth in the consumer market is still happening, but it's driven by higher pricing, not growth in shipments.
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Earlier this year, Intel's David Zinsner, chief financial officer, attributed a 13% YoY growth in Intel's consumer business to higher average selling price (ASP), not increased unit sales. Zinsner clarified that Intel "thought we had seen some inflation on our cost and needed to pass that on to the end customer."
Micron's outlook for fiscal Q1 2027 has revenue set at another record of $61.5 billion ± $1.5 billion, with gross margin rounding from 87% in fiscal Q4 2026 to 86.25%.
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Another record quarter signals more squeeze on the DRAM and NAND markets. Echoing rival SK hynix, Micron says it expects memory and storage to be "much tighter" in 2027 and 2028, claiming that the company expects the industry to be supply-constrained in both years. That's despite a growth in supply that Micron anticipates.
The company says it expects industry NAND bit shipments to grow in the mid-20% range, and DRAM bit shipments to grow in the low-20% range. The industry broadly will produce more memory over the next two years, says Micron, but that still won't keep pace with demand.
Worrying still is this line in Micron's earnings slides: "we do not have line of sight to when supply and demand will return to balance." However, the company says it plans to increase its capital expenditure (capex) in fiscal 2027 compared to its prior estimates.
A "majority" of that increase is set aside for construction of additional clean room space, which Micron has set for 2028 through the end of the decade. Hopefully, that additional clean room space coming online will ease supply constraints, but we're still a long way from that point.
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Jake Roach is the Senior CPU Analyst at Tom’s Hardware, writing reviews, news, and features about the latest consumer and workstation processors.
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Jame5 I believe the only sane response to this in light of Micron's insistence that this will happen forever so that they keep earning these high margins is....Reply
<expletive deleted> off. -
bigdragon 88% profit margin should be setting off alarm bells at every level of government -- from consumer protection to those who manage our infrastructure and manufacturing capabilities. Things are clearly not working correctly unless you're one of the few elites at the top.Reply
I'm not surprised that 2027 is predicted to be worse than 2026. I think we'll hear the same predictions about 2028 too. The memory industry needs a serious intervention! I'm not sure who has the will to do something about it though. -
Dntknwitall I find it a bit odd that there is a shortage and yet they keep making record profits off the consumer market! This is just blatantly throwing it in the faces of law makers that do not plan on doing anything cause everyone has a price nowadays. Price fixing, na, who cares we will take bribes until it comes out it 5 years. This is the most ridiculous open price fixing in history and nobody seems to want to do anything cause they have put AI at such importance at a federal level that nobody wants to touch it. These companies have become untouchable for the foreseeable future or until the AI bubble pops.Reply -
thestryker At this point I'm just waiting to see what happens when additional capacity comes online. This would be when we see how artifical the price hikes are.Reply -
derekullo Reply
Taken another way ... https://finance.yahoo.com/quote/MU/.TechieTwo said:Vote with your wallet. That's the only thing unscrupulous companies understand IME.
Your wallet would be doing quite well. -
simba7 Hey Micron, eff all the way off a cliff. Thanks for giving your consumer business customers the finger while deep throating AI. I hope you crash and burn.Reply -
justrudi Reply
That is why it is still does not come online, an even rumored that current capacity was decreased to maintain the demand. Even though I clearly understand the consequences, but I do wish YMTC's capacities expanding, as well as other memory manufacturers popping up. Only with an actual competition or government involvement the change is possible. And now is a golden moment that may excuse massive investments into new memory companies, with expectations of similar margins. As long as there will be someone who is in conflict with the big 3 and have enough capital to start the challenge like china did.thestryker said:At this point I'm just waiting to see what happens when additional capacity comes online. This would be when we see how artifical the price hikes are.