Key Takeaways
- Micron reported $37.7 billion of net income for its fiscal fourth quarter, about $8 billion more than Apple’s $29.8 billion in its June quarter.
- The memory shortage has given Micron the pricing power, and its biggest customers are paying for it.
- Apple guided its September-quarter gross margin to about 46.5% excluding tariff refunds, down from 48.1% in June, and said memory more than accounts for the drop.
- Micron trades at 5.9x forward earnings, below its three-year average of 10.5x, even though analysts expect its earnings per share to more than double in fiscal 2027.
Micron Technology (MU) just made more money in a quarter than Apple (AAPL) did. (Yes, that Apple.)
Charlie Bilello, chief market strategist at Creative Planning, explained how in a post on X on Tuesday:
“Apple needs the chips.
Micron has the chips.
Micron sets the price.”
Micron’s net income, he added, “has surged 42x in just 2 years to $38 billion – $8 billion MORE than Apple earned last quarter.”
His verdict? “We’ve never seen pricing power like this.”
The numbers check out. Micron reported $37.7 billion of net income for its fiscal fourth quarter on Sept. 30, up from $3.2 billion a year earlier. Apple earned $29.8 billion in its June quarter. And the other side of that trade is starting to show up in Micron’s customers’ numbers.
The orders are the orders
Micron earned $1.30 a share of normalized earnings in fiscal 2024 and $75.52 in fiscal 2026, and the 35 analysts covering fiscal 2027 expect $176.15.
Josh Brown, CEO of Ritholtz Wealth Management, talked about Micron’s guidance on Tuesday’s episode of The Compound and Friends: “not only is it not being tempered, it’s actually being ratcheted up.” Micron expects $61.5 billion of revenue in the first quarter of fiscal 2027, up from $54.2 billion in the quarter it just reported. And CEO Sanjay Mehrotra told CNBC, “In fact, we cannot fulfill the demand of our customers.”
Someone has to pay for it
Micron’s pricing power is its customers’ bill. And Apple buys a lot of memory.
Apple came into the shortage with plenty of cushion. Its gross margin rose every year, from 41.8% in fiscal 2021 to 46.9% in fiscal 2025.
Now that cushion is getting used up. Excluding tariff refunds, Apple’s gross margin fell to 48.1% in the June quarter from 49.3% in March, and Apple guided the September quarter to about 46.5% on the same basis. Management said memory more than accounted for the June drop and is driving September’s too, and that the help from inventory it already had on hand shrinks after September.
Tim Cook, Apple’s CEO until John Ternus took over on Sept. 1, called memory pricing “a hundred-year flood” on the July earnings call.
Apple isn’t the only big buyer feeling it. On Wednesday’s episode of In Good Company, John Armitage, co-founder of Egerton Capital, highlighted Nvidia’s exposure to rising memory costs: “one of the big issues about NVIDIA is memory cost inflation and what it does to their bill of materials.” Nvidia, as he noted, “makes 75% gross margins,” so it has more room to absorb the hit than Apple does.
Isn’t this about to end?
The obvious objection is that Apple can pass the cost on. It launches its first folding phone, the $1,999 iPhone Duo, on Oct. 23.
Maybe. But for now, Apple’s own guidance says it’s eating the cost.
The other objection is supply. Micron shares fell in early trading Wednesday after Reuters reported that 1,994 members of the union at Micron’s Taoyuan operations, 99% of those voting, had authorized a strike over a bonus dispute. Taiwan is a major hub for Micron’s DRAM and HBM.
The vote doesn’t start a walkout, though: the union says the timing and details are still under discussion. And if workers did walk out, it would pull supply from a market that’s already short, which is hardly relief for Apple’s memory bill. More industry supply or weaker demand could erode Micron’s pricing power, although Micron says it cannot meet customer demand today.
Priced like it ends tomorrow
That doubt shows in the stock. Micron trades at 5.9x forward earnings, well below its three-year average of 10.5x.
(Late 2023 skews that average: Micron’s earnings were near zero then, and its multiple swung from -65.8x to 82.8x.)
Micron is out-earning Apple because Apple, Nvidia and every other big buyer need chips that Micron can’t make fast enough. As long as demand outstrips supply, Micron retains strong pricing power, and I think 5.9x forward earnings undervalues that advantage.
Apple’s next report, expected in late October, will show whether memory costs are still climbing. And a long strike in Taiwan would test Micron’s own output.
So what is Micron stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
