Looking at Micron’s (MU) fourth-quarter results on Wednesday, analysts weren’t too concerned about the company’s memory and storage demand.
After all, data center builders are buying chips so quickly that Micron and rivals SK Hynix (SKHY) and Samsung (005930.KS) can’t keep up.
But Wall Street observers had their eyes on the company’s gross margins, which continued to climb throughout the AI explosion.
“Can gross margins stay the same, or do we need some normalization so that it doesn’t look like, you know, prices go up in an instant?” ” Ben Bajarin, CEO and principal analyst at Creative Strategies, told Yahoo Finance ahead of Micron’s earnings announcement (video above).
During the company’s earnings call, Micron CFO Mark Murphy explained that he expected first-quarter gross margins to set a new low and increase from there.
Micron stock fell 2% Thursday morning.
1,091.16 +26.05 (+2.45%)
At 1:50:04 p.m. EDT. Open market.
Analysts are also looking for more information on Micron’s Strategic Customer Agreements (SCA), long-term agreements that guarantee the lowest possible price for memory and storage chips.
According to Murphy, Micron’s first-quarter margins will decline due to increased financial compensation for fiscal 2026 related to manufacturing. The company absorbed most of this increase in the fourth quarter, but the impact will be felt in the first quarter.
As a result, he told analysts, Micron expects gross margins to increase beyond the first quarter thanks to more moderate price increases.
Micron stock is up about 280% this year as of Tuesday’s close.
1,091.16 +26.05 (+2.45%)
At 1:50:04 p.m. EDT. Open market.
SCAs are intended to serve as a hedge against a slowdown in future memory sales. Outside of the AI boom, the memory and storage industry traditionally experiences boom and bust cycles. SCAs are designed to protect against a rapid decline in sales while providing the business with a clearer understanding of future revenue.
According to CEO Sanjay Mehrotra, Micron has signed 26 SCAs, which the company estimates will account for more than 35% of its revenue through 2030.
In-house AI tools helped analyze interview transcripts and write this story. The editors reviewed, edited and fact-checked this article before publication.
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