Here's what matters most for Micron's stock going into earnings

By Britney Nguyen

Improvements in the DRAM and NAND markets led Morgan Stanley to raise its estimates and price target for Micron's stock, which the analysts say will likely be driven by clarity on its position with HBM

Micron reports fiscal fourth-quarter earnings on Tuesday.

Ahead of Micron Technology Inc.'s earnings report this week, analysts at Morgan Stanley raised their estimates for the company on strength in the memory space, but said that questions still remain in one of Micron's more competitive areas.

The memory-chip maker (MU) is expected to report revenue guidance of $11.9 billion for the November quarter, according to FactSet, which was in line with Morgan Stanley's previous estimate.

However, the analysts raised their revenue target to $12.5 billion in a note on Monday, citing "anecdotes now of substantial tightness of most components going into compute infrastructure markets in particular," which is leading to higher prices in the market for dynamic random-access memory. Additionally, the volume "looks good," and is expected to last into the first half of next year, they said.

The analysts also said volumes for high-bandwidth memory "are still good," but that Nvidia Corp.'s (NVDA) "monopsony," or being the only buyer, for the latest-generation HBM3e will likely lead to a "step down" for prices for those chips, a type of DRAM, toward the end of the year. At the same time, Wall Street is focused on Samsung Electronics Co. Ltd.'s (KR:005930) HBM3e being qualified for use in Nvidia's AI chips.

Questions also remain for HBM4, the analysts noted, pointing to reports about "increased speed requirements" that could have an impact on Micron's potential share of the market for the next-generation HBM chips. The analysts noted that Micron "continues to be highly confident in their position" for HBM, and that the company expects to be sold out of HBM next year.

Micron is slated to report fiscal fourth-quarter earnings on Tuesday.

The Morgan Stanley analysts said they expected that the chip maker will have a good 2026 in HBM, but that clarity on its position in that market will likely drive its shares more than beating Wall Street's estimates. While the analysts "don't expect perfect clarity" from Micron on the competitiveness of its upcoming HBM product, "reiterating market-share targets are achievable again in [calendar year 2026] with margins above corporate average should be enough," they said.

Meanwhile, the analysts said they expect fourth-quarter NAND prices to be higher, but any positivity would depend on the durability of the price increase. Although Micron expresses more caution for its NAND products due to lower gross margins compared to its DRAM offerings, the analysts said they "expect positivity" from Micron's earnings call.

Morgan Stanley said Micron's capital-expenditures spending for the upcoming fiscal year 2026 will be "a key variable" for its stock.

"On the one hand, guidance for a sizeable spending increase is a signal on further confidence in the business and on the HBM opportunity," the analysts said.

If Micron's capex guide isn't "appreciable" higher for next year, investors may take that as a sign that its HBM opportunity for next year "has changed for the worse," the analysts said.

On the other hand, however, capex "has significantly constrained [free cash flow] through this point in the upcycle," the analysts noted.

They added that Micron's guide for its capex "is net of government incentives," which was $1.3 billion in the most recent 12-month period. The unclear timing of when Micron will receive its Chips Act grants, which total about $6.1 billion, could also lead to "a wider gap" between its total spending growth and guidance.

Micron's earnings results "will matter most for DRAM and NAND stocks," as well as the stocks of semiconductor equipment-makers in the near term, Mizuho desk-based analyst Jordan Klein said in a note on Monday. The bar for Micron is "super high," he said, and what the company says about expected pricing trends going into the coming quarter will influence if bullish investors keep their enthusiasm, or if they find the risk-reward "unfavorable."

Micron's guidance for its November-quarter gross margins will be a "key" signal for its expectations in pricing, Klein said, adding that with consensus estimates at 46%, Micron will likely have to guide at least 48% gross margins for its stock to maintain recent gains.

See more: Micron's hot streak is ending, but here's what matters next for the stock

For the fiscal fourth quarter, Micron is expected to report revenue of $11.2 billion and adjusted earnings of $2.86 a share, according to FactSet. The consensus calls for $8.8 billion in revenue for the DRAM segment of Micron's business, while its NAND segment is expected to make $2.3 billion in revenue.

-Britney Nguyen

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09-22-25 1804ET