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Micron Offers `Unprecedented Forward Visibility' as Deals Expected to Generate $100 Billon in Revenue

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Micron Offers `Unprecedented Forward Visibility' as Deals Expected to Generate $100 Billon in Revenue

Micron Technology (MU) offered "unprecedented forward visibility" when it said this week it signed 16 strategic customer agreements that will create $100 billion in revenue over the remaining term of the agreements, Wedbush analysts Matt Bryon and Antoine Legault said in a note to clients.

The deals will account for 20% of its dynamic random-access memory, or DRAM, volume and a third of NAND flash memory volume through 2030. The agreements enhance partnerships and provide supply assurance to customers, with four customers Micron described as "very large," three medium-sized clients and smaller firms from the automotive sector.

"The surprise, in our view, was the level of detail that Micron was able to provide around the forward contracts it has negotiated for a significant portion of its forward bit output, with the new deals seemingly providing unprecedented revenue, margin and earnings certainty for an elongated period," the Wedbush analysts said.

Revenue in the third quarter rose to $41.5 billion from only $9.3 billion a year earlier, while earnings were reported at $25.11 a share versus $1.91 per share in Q3 2025, Micron said. Analysts polled by FactSet expected sales of $35.9 billion and earnings of $20.86 a share.

Morgan Stanley analysts said in a report that while the quarterly results and outlook are "good," there is a bigger debate about the durability of current conditions.

Micron shares jumped almost 16% immediately after the company reported better-than-expected results on Wednesday, becoming one of the top gainers on the S&P 500 and the Nasdaq. The stock was giving back gains pre-market on Friday, trading down almost 6%.

"We noted in our preview that the investor mindset seems to be much more that people are looking to add vs. the last two quarters where people were looking for reasons to sell, and the after hours reaction (on Wednesday) seemed consistent with that," Morgan Stanley said.

Bank of America analyst Vivek Arya reiterated a "buy" rating on the company after the strong quarter reinforced the bank's constructive view on the role memory plays in artificial intelligence, with increasing discipline on the supply side supporting a "durable cycle."

"While strategic customer agreements -- now 16, up from last quarter -- may modestly cap near-term pricing upside, they materially enhance visibility and reduce volatility by aligning with customers facing a rising 'memory tax'" of about 35% of AI capital expenditures, Arya said.

With a captivating valuation and shares implying a roughly 10% free-cash-flow yield, the bank raised its EPS outlook by 4% to 7% and increased its price objective on the stock to $1,550 a share from $1,500.

Demand for DRAM and NAND will continue to "significantly exceed" supply, Micron said. The company said it expects these tight conditions to persist beyond 2027 due to demand across all segments for AI.

"The memory industry has been structurally transformed by the proliferation of AI," Micron Chief Executive Sanjay Mehrotra said in prepared remarks after the company's earnings were released. "We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time."

Marcy Nicholson

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