Key Takeaways
- Elon Musk said on X that Micron Technology has been “reasonable” on future memory prices while others have been “extortionate,” after a JPMorgan note counted 26 long-term deals and $150 billion of contracted backlog at Micron.
- Micron’s largest contracts cap prices near the market level of the second quarter of 2026, giving up some upside now for revenue that, by JPMorgan’s count, covers more than a third of sales through 2030.
- That trade matters most in 2028, when Musk says a fast Chinese ramp in low-power memory would make for “a different story.”
- Micron’s gross margin still reached 87% in its fiscal fourth quarter, and its Oct. 21 technology webinar is the next thing to watch.
Elon Musk has a message for the memory industry, and it’s good news for Micron Technology (MU):
Customers are keeping score.
On Oct. 13, X user Nick Mugalli posted highlights from a new JPMorgan note on Micron. According to JPMorgan, Micron now has 26 long-term deals covering 35%+ of revenue through 2030, $150 billion in contracted backlog, and $32 billion in customer cash already committed.
“Micron has been reasonable regarding future memory prices, while others have been extortionate, which is something today’s customers won’t forget …”
He called it “the smart move for long-term customer loyalty.”
Coming from Musk, that’s practically a love letter. (And he’s talking as a buyer: Tesla (TSLA) and SpaceX (SPCX) both run large AI computing operations.)
Micron could use the love. Its shares lost about 12% last week in a chip selloff, right alongside Intel (INTC). Investors worry that new capacity from SK Hynix (SKHY), Samsung Electronics (005930) and China’s CXMT will end the memory boom. On Oct. 12, Jim Cramer put it simply: “Nothing is moving these stocks.”
Micron put a ceiling on its own prices
So what does “reasonable” look like?
In its fiscal third quarter, Micron started signing what it calls strategic customer agreements. These are take-or-pay deals with fixed volumes over several years. Micron’s quarterly report for the period ended in May says the largest ones generally cap prices for existing products at about the market price in the second calendar quarter of 2026, with a floor for the rest of the deal. Its annual report adds that even at floor prices, Micron expects gross margins on its banded deals to land well above its best quarter of any past cycle.
Musk didn’t say who the “others” are. But Micron’s two big rivals have gone the other way. In January, Korea’s Hankyung [LINK NEEDED] reported that SK Hynix and Samsung were turning down two- to three-year deals and sticking with quarterly contracts, expecting prices to rise every quarter through 2027.
So far, that bet is paying off. SK Hynix says its DRAM average selling prices rose about 30% in the second quarter of 2026 compared with the first.
Buyers are feeling it. On Oct. 16, Musk replied to a post about a Wall Street Journal report [LINK NEEDED] that Michael Dell, founder of Dell Technologies (DELL), expects the memory crunch to get worse.
2028 is the year that counts
Musk’s answer on Dell: “For sure in 2027, but if China ramps LP5 & LP6 as fast as they’ve ramped other manufactured products, then 2028 will be a different story.”
LP5 and LP6 are the newest generations of low-power DRAM. (He added that HBM “is a tougher hill to climb, however.”)
Micron’s contract book is built for exactly that period. JPMorgan’s $150 billion backlog is more than half of what analysts expect Micron to bring in during fiscal 2027, and management has said 75% of its fiscal 2027 output is already committed.
Analysts expect revenue to keep climbing, from $133 billion in fiscal 2026 to $276 billion in fiscal 2027 and $319 billion in fiscal 2028.
So analysts aren’t modeling a 2028 cliff. If China does flood the market, the fiscal 2028 figure has the most to lose, and contracts covering more than a third of revenue should limit how far it falls.
Restraint hasn’t cost Micron much margin (yet)
The obvious knock: any margin Micron gives up on price, SK Hynix gets to keep.
Micron’s own numbers don’t show much of a sacrifice. Its gross margin more than doubled, from 39.8% in fiscal 2025 to 80.7% in fiscal 2026.
In its fiscal fourth quarter, it was even higher: 87%.
SK Hynix did get there first. Its gross margin hit 48.1% in 2024 and 60.4% in 2025, well ahead of Micron’s for the fiscal years ending in those years.
The latest quarters are much closer. SK Hynix’s operating margin was 76% in the quarter to June, and Micron’s was 82% in the quarter to early September (two months apart, so not a perfect comparison).
Of course, the ceilings cost more the longer prices keep rising, and Micron only began signing these deals in its fiscal third quarter, so the full cost may not show up yet.
Loyalty is the hedge
I think Musk has it right: Micron is making the smarter trade. Missing the last leg of a price spike is a small cost for revenue locked in through 2030, especially if, as Musk himself expects, Chinese supply shakes up the market in 2028. When that happens, the customers paying “extortionate” prices today will have other options, and they’ll remember who treated them well.
The biggest unknown is how fast China catches up, and Musk says HBM is where it’s hardest. Micron President Scott DeBoer will walk through the company’s DRAM, HBM and NAND roadmap at a technology webinar on Wednesday, Oct. 21. That’s the next chance to see how far ahead Micron really is.
So what is Micron stock actually worth?
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