Micron nears $49 billion in quarterly profit as AI memory demand surges

Micron Technology is on track to generate nearly as much operating income in a single quarter as it earned over the past two decades combined.

The memory chipmaker's Q4 guidance implies operating income of roughly $49 billion, approaching the $59 billion in cumulative profit it produced over the prior 20 years, as AI demand for high-bandwidth memory outstrips supply.

"SK is definitely Nvidia's biggest provider, and it arguably is most strategic," Daniel Newman, CEO of Futurum Group, said on the Futurum Equities Podcast, while noting that Micron carries the lowest geopolitical risk as a US-based manufacturer.

Micron's data center unit posted an 83% operating margin last quarter, margins more typical of software companies than chipmakers. The company, alongside SK Hynix and Samsung, controls about 90% of global DRAM production and virtually all HBM output — the specialized memory powering Nvidia's AI accelerators. Industry capacity is expanding only 20% to 30% annually while AI demand doubles, a mismatch that SemiAnalysis and other research firms expect to persist through at least 2028.

Wall Street projects $90 billion to $100 billion in operating income for Micron this fiscal year and roughly $133 billion in 2027. Even if margins ease from current peaks, the structural supply-demand imbalance suggests Micron has entered a fundamentally different profit regime. The question for investors is no longer whether AI is boosting memory demand, but how long the shortage — and Micron's pricing power — can last.

A Structural Shift in Memory Economics

Memory chips have historically been a commodity business where prices swung violently with supply and demand. That model has broken. Three companies now control the entire HBM supply chain, giving them pricing power that has transformed margin profiles. Micron's data center operating margin of 83% last quarter rivals that of enterprise software companies.

Futurum Equities' Chief Market Strategist Shay Boloor highlighted the extremity of the cycle, noting on X that SK Hynix is expected to hit a 91% DRAM gross margin in Q2. Despite SK Hynix's Nasdaq debut this week under the ticker SKHY — offering US investors direct exposure to Nvidia's top memory supplier — Boloor said he prefers Micron. "I just think something wonky is happening in the Korean markets right now," he said on the Futurum Equities Podcast. "So, I'm just gonna stick with Micron."

Supply Constraints Through 2028

The supply-demand math underpinning these margins is straightforward. Memory capacity is growing 20% to 30% annually, constrained by the capital intensity of building advanced fabrication plants and packaging facilities. AI infrastructure spending, by contrast, is roughly doubling each year as hyperscalers race to deploy Nvidia's latest GPU generations.

Micron CEO Sanjay Mehrotra has announced a $250 billion investment plan for expanded AI memory chip development, showing that the company expects demand to remain elevated for years. Industry participants now expect the supply shortage to persist until 2028 at the earliest, according to research from SemiAnalysis.

Micron shares have surged 232% year-to-date, closing at $948.80. At current valuations, the market is pricing in sustained margin expansion — but if supply remains tight through 2028 as many expect, even Wall Street's bullish forecasts of $133 billion in 2027 operating income could prove conservative. The risk is that rising memory prices eventually push customers to delay purchases or seek alternatives, though no viable substitute for HBM exists today.

This article is for informational purposes only and does not constitute investment advice.