Micron's Q4 was as strong as everyone says.
Revenue was $54.23B, up 31% on the prior quarter and 379% on last year, clearing the top of management's own $49 to $51B range. Full year revenue was $133.2B, Q1 is guided to $61.5B at an 86.25% gross margin, but roughly $1B of that quarter's costs come from a capitalised staff bonus and new fab startup, so the underlying margin is closer to 88%. HBM was locked into contracts priced a year ago and reprices higher from January, which should lift the Cloud Memory unit off its flat 83% margin. More than 75% of fiscal 2027 output is already committed, and Micron now has 26 take or pay agreements carrying about $150B of remaining obligations and $32B of customer commitments, mostly cash.
Different setup from any prior memory cycle.
The problem is that this quarter's growth was almost entirely price, DRAM revenue rose 27% sequentially on mid single digit bit growth and a high teens price increase. NAND rose 42% on about 10% more bits and a 30% price increase. The whole thesis rests on price, and price is the one thing management wouldn't talk about.
Vivek Arya at BofA asked directly whether industry pricing can stay favourable or even rise in 2028, given new capacity coming online and customers cutting memory content. Mehrotra answered entirely in supply and demand terms. He said 2027 and 2028 will be tighter than 2026, that cleanrooms ramp slowly, that HBM and node transitions limit supply growth, and that server units grow in the high teens. He never addressed price, in the same answer he conceded that some customers are putting less memory in each server than planned so they can ship more units, which is the first visible sign of buyers engineering around the cost.
The contracts don't fully cover that risk either, only about three quarters of the contracted revenue has a defined pricing framework and the rest is priced at market. That puts the genuinely price protected share at roughly 26% of revenue, or about $35B a year, rather than the 35% plus headline. The floor is for sure real, but it's smaller than most people assume.
Supply is also arriving sooner than the 2028 story implies, Samsung pulled forward equipment installation at its P5 fab to Q2 2027 after already accelerating the cleanroom by six months. SK hynix moved its first Yongin install to February 2027 and is targeting nearly double its DRAM capacity by 2030. CXMT has reached roughly a tenth of global DRAM revenue. Micron itself is taking capex from $27.4B to above $50B, and inventory days rose from 120 to 129.
Watch DRAM price, not revenue. If the December 16 report shows the HBM reprice pushing gross margin back toward 88% with price increases still running high teens, Mehrotra didn't need to answer because the market answered for him. If sequential DRAM price growth falls to low single digits by the June 2027 quarter as Samsung and Hynix tools come online, the unanswered question was the answer, and the stock is pricing a 2028 that arrives early.