Micron Technology, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights: Micron had an outstanding fiscal 2025, with revenue growing nearly 50% to a record $37.4 billion and gross margins expanding by 17 percentage points to 41%. AI is driving both demand and productivity within the company, with a 30-40% productivity uplift in select GenAI use cases. Technologically, the one gamma DRAM node reached mature yields in record time, 50% faster than the prior generation. In end markets, data center server units growth outlook improved, HPM revenue grew to nearly $2 billion in Q4 with an annualized run rate near $8 billion. For PCs, the demand outlook improved due to the end of life of Windows 10 and greater adoption of AI-enabled PCs. Smartphone unit shipment expectations remained in a low single-digit percentage range, but there was increasing AI-ready smartphone content growth. Automotive and embedded demand strengthened, with improved profitability due to stronger pricing and increased mix of advanced technology nodes.

Segment Performance: In fiscal Q4 2025, total revenue was $11.3 billion, a quarterly record. DRAM revenue was $9 billion, up 69% year over year, representing 79% of total revenue. NAND revenue was $2.3 billion, down 5% year over year, representing 20% of total revenue. For business units, the cloud memory business unit (CMBU) had revenue of $4.5 billion, accounting for 40% of total company revenue, with a 34% sequential increase driven by robust bit shipment growth and HBM revenues reaching a new quarterly high, and gross margins of 59%. The core data center business unit (CDBU) had revenue of $1.6 billion, 14% of total company revenue, up 3% sequentially, with gross margins of 41%. The mobile client business unit (MCBU) had revenue of $3.8 billion, 33% of total company revenue, up 16% sequentially, with gross margins of 36%. The automotive and embedded business unit (AEBU) had revenue of $1.4 billion, 13% of total company revenue, up 27% sequentially, with gross margins of 31%. The consolidated gross margin for fiscal Q4 was 45.7%, up 670 basis points sequentially.

Guidance: Fiscal Q1 2026 guidance includes a record revenue of $12.5 billion ± $300 million, gross margin in the range of 51.5% ± 100 basis points, operating expenses of approximately $1.34 billion, and non-GAAP diluted EPS of a record $3.75 per share ± 15¢. Fiscal 2026 capital expenditures are expected to be higher than fiscal 2025 levels, with DRAM front-end equipment and fab construction driving higher capital spending in 2026.

Risks: On the supply side, risks include low supplier inventories, constrained node migration as the industry supports extended d four and LP four end of life, longer lead times, and higher costs globally for new wafer capacity, all limiting the pace of DRAM supply growth in 2026.

Q: Timothy Arcuri asked about the breakdown of guidance between DRAM and NAND in Q1 and gross margin puts and takes.

A: Mark Murphy stated that Q1 growth is heavier on DRAM mix, with a favorable pricing environment and tight supply for DRAM and improving conditions in NAND.

Q: Timothy Arcuri inquired about updating the HPM total addressable market (TAM).

A: Sanjay Mehrotra said HPM TAM is expected to reach $100 billion by 2030, with HPM bits growing faster than DRAM compound annual growth rate (CAGR) and Micron well-positioned with a strong product portfolio.

Q: Vivek Arya asked about the HPM three e to four transition and gross margin outlook.

A: Sanjay Mehrotra said HPM four production is ramping in line with customer demand, and Mark Murphy mentioned gross margin is expected to improve sequentially with tight DRAM supply and NAND improvement.

Q: CJ Muse asked about DRAM demand inflection and capital expenditures.

A: Sanjay Mehrotra talked about strong AI trends and demand across various markets, and Mark Murphy said capital expenditures in 2026 are mostly for DRAM with government incentives factored in.

Q: Harlan Sur asked about HBM four performance and power consumption.

A: Sanjay Mehrotra discussed Micron's design and technology that enables HBM four's high performance and superior power efficiency.

Q: Krish Sankar asked about the HPM supply opportunity and HBM four e customization mix.

A: Sanjay Mehrotra explained HPM supply plans and that HBM four e will have both standard and customized products, with customization providing higher gross margins.