Micron's DRAM Revenues Hit $28.6B: Can the Momentum Continue?

Micron Technology MU ended its fiscal 2025 with record sales in the Dynamic Random Access Memory (DRAM) business. For fiscal 2025, Micron delivered DRAM revenues of $28.6 billion, which represents a year-over-year increase of 62%. Moreover, in the fourth quarter of fiscal 2025, DRAM sales contributed to $9 billion of revenues, which represent around 80% of Micron’s total sales made during its fourth quarter. 

Growth came from higher demand across data centers, PCs, phones, and automotives, along with better pricing, driven by limited DRAM supply. A key driver was Micron’s high-bandwidth memory (HBM) chips, which are used in AI servers. HBM revenues were nearly $2 billion in the fourth quarter, which led to Micron achieving an annualized run rate of about $8 billion from this product line. The company has also started shipping its new 1-gamma DRAM, which should further benefit its top-line growth.

Looking ahead, Micron sees continued strong demand. AI servers, AI-ready smartphones, and AI PCs are using more memory. At the same time, DRAM supply across the industry is tight because of lean inventories and slower supply growth. Micron expects Industry DRAM demand to grow in the high-teens percentage in calendar 2025, while its own bit supply growth is expected to stay lower than the industry’s. This limited supply scenario could result in increased prices, which supports the scope for margin expansion. 

These conditions have already lifted profits and are expected to aid margin gains in the upcoming quarters. In fiscal 2025, gross margins improved to 41%, up from 24% a year earlier. Looking ahead, for the first quarter of fiscal 2026, Micron expects revenues of about $12.5 billion, while gross margins are expected to stay above 51%. The Zacks Consensus Estimate for first-quarter revenues is pegged at $12.14 billion, indicating a year-over-year increase of 39.3%.

How Competitors Fare Against Micron

Micron competes with Western Digital Corporation WDC and Seagate Technology Holdings plc STX in the data storage market.

Micron competes with Western Digital in the NAND market. Western Digital is a diversified storage company with a broader portfolio that includes both traditional hard disk drives (HDDs) and NAND-based solid-state drives (SSDs).

Seagate is a major force in the HDD market, particularly for high-capacity storage solutions for data centers and cloud infrastructure. Seagate is also developing its presence in the SSD market through portfolio expansion and partnerships.

Micron’s Price Performance, Valuation and Estimates

Shares of Micron have rallied around 86.1% year to date compared with the Zacks Computer – Integrated Systems industry’s growth of 41.4%.

MU YTD Price Performance

From a valuation standpoint, MU trades at a forward price-to-sales ratio of 3.43, slightly lower than the industry’s average of 3.86.

MU Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings implies a year-over-year increase of approximately 64.8%. Estimates for fiscal 2026 have been revised upward in the past seven days.

Micron Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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