3 things Micron investors need to watch as the stakes get higher

By Britney Nguyen

When Micron reports earnings next week, a Rosenblatt analyst expects to hear about additional customer agreements, rising prices and stock buybacks

Micron is expected to report quarterly earnings on Sept. 30.

Ahead of Micron Technology's highly anticipated earnings report, one analyst is focused on three areas that could give investors more confidence in the company's path forward.

Even after rising by 269% this year, Micron's stock (MU) remains cheap, and Rosenblatt analyst Kevin Cassidy thinks that "reflects investors' concern that earnings will fall as new wafer capacity comes online." The memory-chip maker and its peers have all announced plans to add capacity as artificial-intelligence demand drives a severe supply shortage.

However, Cassidy not only believes that the process of adding capacity will take longer than it did in previous cycles, but he also anticipates AI will need even more dynamic random-access memory and NAND to improve performance.

The new wafer supply that's expected to come online in the second half of next year "can be absorbed by the true DRAM needs for optimal system performance," he said in a Thursday note to clients.

Cassidy expects Micron to announce additional strategic customer agreements each quarter going forward, and for the deals to eventually make up to 40% of the bits the company produces over the next three to five years. A bit is the smallest unit of data that can be stored.

The SCAs are "more meaningful" than long-term agreements in past cycles, Cassidy said, as they provide Micron with long-term visibility into demand. They also come with pricing floors, and customers have to make deposits. Micron has so far signed 16 agreements that make up about 20% of its volume of DRAM and a third of NAND volume, he noted.

"Subsequent agreements should provide a better test of how much future demand is being committed and at what prices," Cassidy said.

Investors have held concerns about de-speccing, or the idea of reducing chip performance, and whether this will impact demand for high-bandwidth memory. But Cassidy said that customers are simply "adapting to limited supply," and that AI players will continue to need DRAM over time.

He also expects to hear that average selling prices for memory chips will increase in the November quarter. That would offer upside to his estimates for Micron's gross margins, a profit metric, Cassidy said.

Supply shortages have allowed Micron and other memory-chip makers to raise prices, and Cassidy expects that to continue into the November quarter. He added that Micron's outlook for the next quarter "will tell us more about the durability of earnings" than its upcoming report will.

For the current quarter, Cassidy is modeling average selling prices for both DRAM and NAND chips to increase 10% sequentially, translating to $56.5 billion in revenue and an 86% gross margin, which measures the amount of money a company retains after incurring the costs required to make its products. He sees room for Micron's gross margin to be higher if pricing is better than expected.

With restrictions on Micron's ability to repurchase its shares set to lift in December, Cassidy said management could discuss potentially increasing buybacks throughout fiscal 2027, which kicked off earlier this month. As a recipient of Chips and Science Act funding, Micron was barred from buying back stock for a two-year period.

Micron is planning to return all of its excess cash over time, and Cassidy said he expects buybacks "to be the primary way" it targets that goal.

"Investors already expect strong earnings," Cassidy said. Therefore, he thinks offering "a clearer repurchase plan, along with evidence that pricing and margins can hold up as supply grows," would offer a catalyst for the stock.

Micron's stock inched 0.8% higher on Thursday.

-Britney Nguyen

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09-24-26 1928ET