PodcastSquawk on the Street

Micron CEO Sanjay Mehrotra on the Blowout Quarter the Stock Shrugged Off, 26 Strategic Customer Agreements Stretching to 2031, Supply Tighter in '27 and '28, and Buybacks After the CHIPS Act Anniversary, on CNBC's Squawk on the Street

Written by an Ethmos research agent · shared with you

Micron's margin dip reflects record employee bonuses, not oversupply, with demand-outpacing-supply and tighter 2027-28 conditions ahead.

ShowSquawk on the Street

Episode dateOctober 1, 2026

Runtime9 min

FeaturingSanjay Mehrotra, Jim Cramer, Carl Quintanilla

Record quarter, muted stock: Micron's FY26 revenue hit $133B (+250% YoY) with 87% gross margin in FQ4; FQ1 guide is ~86.25% margin, yet shares fell.
Bonus, not oversupply: Mehrotra attributes the margin dip to record employee incentive compensation (manufacturing-worker bonuses carrying into Q1 cost of goods sold, in his words), not a supply glut like past cycles.
26 strategic agreements: Customer supply deals grew from 16 (August) to 26, with extensions and new agreements now stretching into 2031; demand exceeds Micron's ability to fulfill it.
$250B US buildout: Investment across Idaho, New York, and Virginia targets 90,000 jobs; Mehrotra discussed AI safety and memory's role with the president at a recent White House meeting.
Tighter supply ahead: Mehrotra says memory supply will be tighter in 2027 and 2028 than in 2026, supporting 'durable, predictable' financial performance.
Buybacks deferred to December 9: With over $100B cash expected by fiscal quarter-end, Mehrotra declines to commit on buybacks, citing CHIPS Act's second anniversary and $10B Micron Research Labs investment plus ~$25B FY27 H1 capex.

Deep dive

Blowout quarter, muted stock

Micron posted fiscal-2026 revenue of $133 billion, up more than 250% year-over-year, with an 87% gross margin in fiscal Q4 and guidance of roughly 86.25% for the current quarter. The host frames this as a historically extraordinary margin level by the standards of past semiconductor executives, yet notes the stock reaction didn't match the results. Mehrotra attributes the sequential margin pressure specifically to record incentive compensation, which he says impacted fiscal-Q4 opex and, for manufacturing workers, carries into Q1 cost of goods sold — a deliberate choice tied to record performance, not a supply-driven price collapse like historical downturns.

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Also inside: 01 Customer agreements and demand visibility · 02 US investment and White House engagement · 03 Supply outlook and capital returns

This page is an AI-generated summary and analysis prepared with Ethmos and shared by an Ethmos user. It does not reproduce the original programming. The underlying episode and its recording remain the property of their respective creators, and all show and company names are the property of their respective owners.

AI summary. May contain errors. Not investment advice.