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Micron's Mic-Drop Quarter: AI Memory Demand Supercharged Earnings
Submitted by Thomas Hughes. Publication Date: 3/19/2026.
Key Points
- Micron’s fiscal Q2 results showed explosive year-over-year growth, led by AI-driven memory demand and broad strength across business segments.
- Profitability expanded sharply, with major improvements in margins and earnings per share alongside aggressive guidance for the next quarter.
- Analysts largely maintained or raised their views after the report, as attention shifts to capacity spending and the transition to next-generation high-bandwidth memory.
- Special Report: Elon Musk's $1 Quadrillion AI IPO
Many investors doubt the durability of Micron's (NASDAQ: MU) AI-driven boom and the broader AI cycle, but one factor is too significant to ignore—and it outweighs most other concerns.
AI is power-hungry. Its growing energy demands are already forcing data centers and chip suppliers to prioritize energy efficiency and heat reduction, while accelerating wear on the underlying hardware.
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In a market where HBM demand is so strong that capacity is sold out for the foreseeable future and prices are surging, Micron is well-positioned.
Each AI GPU requires multiple stacks of High Bandwidth Memory (HBM), creating a runway for Micron to grow and potentially sustain revenues at elevated levels.
Right now, Micron is trading in deep value territory relative to current-year and next-year earnings forecasts. Analyst projections have been slow to catch up — they haven't seen significant revisions for months and currently expect revenue to dip in fiscal 2028 before accelerating in FY2029.
The likely outcome is continued outperformance, with analysts upgrading forecasts for long-term revenue and earnings, which should support higher stock prices. Even so, a 5x valuation relative to the FY2027 estimate implies the stock could rise at least 100%, and potentially as much as 400%, to align with the broader market. If the market re-rates Micron to a premium, thousands of basis points would be added to that upside.
Micron's Q2 Blowout Put AI Memory Demand Front and Center
Micron delivered a blockbuster quarter reminiscent of NVIDIA's early AI-driven surge, and the company appears set to produce similarly strong results in upcoming quarters.
The company's revenue rose to $23.86 billion, up 197% year over year (YOY) and outperforming the consensus estimate by about 2,300 basis points. Strength was broad-based across segments as demand normalized across end markets.
- Mobile and Client: $7.71 billion (up 245%)
- Core Data Center: $5.69 billion (up 211%)
- Automotive and Embedded: $2.71 billion (up 162%)
- Cloud Memory: $7.75 billion (up 163%)
Margins expanded dramatically. Gross margin widened by roughly 3,700 basis points, lifting gross profit about 5.9x. Operating margin climbed to 69% (from 24.9% last year), and net income increased roughly 7.8x.
The headline number on the bottom line was striking: $12.20 in EPS, well above MarketBeat's consensus of $8.50 and nearly eight times last year's level.
Guidance was equally impressive and supports the valuation outlook. Micron expects revenue growth to accelerate again—topping 250% at the midpoint for the quarter—with earnings growth accelerating to roughly 875%. Given the strength in AI/datacenter spending and broader end-market normalization, these targets could prove conservative.
Analysts Gush With Praise Following Micron's Beat-and-Raise Quarter
Analysts reacted overwhelmingly positively. The primary concern noted was the ramp in spending—focused on capacity expansion and quality improvements—as Micron transitions to HBM4 production to better meet demand (analysis).
Rather than cutting ratings or price targets, firms largely held or raised views: no downgrades or price-target cuts were reported, several analysts reiterated bullish ratings with above-consensus targets, and others moved targets toward the high end.
The consensus estimate has lagged recent price action but is up nearly 200% on a trailing-12-month basis, with the high end of analyst targets around $700.
A brief sell-the-news pullback followed the release, but it was shallow and quickly absorbed. Any further weakness is likely to be limited, with dips finding support at higher levels as Micron's improving outlook continues to drive the stock upward.
Why Broadcom's $100B AI Revenue Forecast May Be Conservative
Author: Leo Miller. Originally Published: 3/25/2026.
Key Points
- Broadcom’s latest earnings call reinforced expectations for sharply higher artificial intelligence chip revenue through 2027 and highlighted improving long-range visibility.
- Analysts pressed management on converting planned data center “gigawatts” into revenue, suggesting the company’s stated 2027 target may leave room for higher outcomes depending on customer mix.
- Broadcom said it has secured key supply-chain inputs through 2028, which management framed as support for multiyear demand and production plans.
- Special Report: Elon Musk's $1 Quadrillion AI IPO
Within its latest earnings report on March 4, semiconductor giant Broadcom (NASDAQ: AVGO) delivered several positive surprises. The firm beat estimates on sales and adjusted earnings per share, issued significantly better-than-expected guidance for the next quarter, reversed prior guidance that had anticipated gross-margin deterioration, and added a sixth buyer to its custom artificial intelligence (AI) processor lineup.
Additionally, the company said its visibility into 2027 had “dramatically improved.” CEO Hock Tan said, “We have line of sight to achieve AI revenue … in excess of $100 billion in 2027.” Next quarter, Broadcom expects to generate $10.7 billion in AI revenue, which would translate to an annual run rate of $42.8 billion. Achieving more than $100 billion in AI revenue in 2027 therefore requires sizable, continued growth in Broadcom's AI business.
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See the 5 stocks to avoidBased on exchanges during Broadcom's earnings call, there is reason to believe even that ambitious forecast may be conservative.
Gigawatts to AI Revenue: Analyst Adds Context Around AVGO’s Outlook
One of the more revealing exchanges on the call was between Tan and Bernstein analyst Stacy Rasgon. Rasgon tried to produce a more specific 2027 AI revenue estimate than simply “in excess of $100 billion" by counting gigawatts (GWs) of data-center capacity Broadcom has secured. GWs describe the power footprint of data-center deployments. Using public information and some assumptions, Rasgon tallied the GW commitments Broadcom had for 2027.
“I'm trying to just count up the gigawatts … you have 3 from Anthropic, 1 from OpenAI, so that's 4. You said Meta was multiple, so at least 2. That gets me to 6. Google, I figure, should be bigger than Meta, so like at least 3, that's 9 and then you got a few others.” From that exchange, Rasgon's estimate appears to be roughly 9–10 GW for 2027.
Rasgon then tried to convert GWs into AI revenue by estimating Broadcom's revenue per GW. “I had thought that your content per gigawatt was sort of, call it, in a $20 billion per gigawatt range,” he said. Bank of America analyst Vivek Arya added another data point supporting this view, noting Broadcom's 2026 1 GW deployment with Anthropic would generate about $20 billion in revenue.
If those assumptions hold, Broadcom's 2027 AI revenue could be far higher than $100 billion. At 9–10 GW and $20 billion per GW, the math implies roughly $180 billion–$200 billion in 2027. Tan's comments push back on that exact calculation but also suggest the $100 billion figure could be conservative.
Tan Provides Support and Pushback on Rasgon’s Estimates
Tan largely confirmed the GW tally, saying, “If you look at it by gigawatt in '27, we are seeing it getting close to 10 gigawatts.” He also cautioned that revenue per GW can vary by customer: “You have to realize—depending on our LLM customer … the dollars per gigawatt vary, sometimes quite dramatically … but you're right, it's not far from the dollars you're talking about.”
Tan did not strongly refute Rasgon's $20 billion-per-GW figure and called it “not far off,” making $20 billion a reasonable baseline for modeling. He also emphasized that dollars per GW can differ substantially across customers.
Even cutting that baseline to $10 billion per GW at 10 GW yields $100 billion. A midpoint of $15 billion per GW would imply roughly $150 billion, which would still represent significant upside to Broadcom's stated guidance.
Supply Chain Agreements: Another Vote of Confidence for AVGO’s Outlook
This analysis depends on several assumptions—most importantly that Broadcom's customers won't scale back their planned GW deployments over the next ~18 months. That is a real risk and could be why Broadcom's guidance appears conservative.
Still, Broadcom's supply-chain moves lend credibility to its outlook. The company said it has secured supplies of leading-edge wafers, high-bandwidth memory, substrates, and T-glass through 2028—components that are in short supply amid the rapid data-center buildout.
Securing capacity beyond 2027 suggests Broadcom is confident in demand through that period. If the company were uncertain about 2027, it would be less likely to lock in supplies for the following year. Melius analyst Ben Reitzes noted Broadcom was likely the first company to secure these components through 2028, indicating an unusually high degree of visibility.
Overall, there are solid reasons to think Broadcom could exceed its 2027 AI revenue guidance, a development that would likely be positive for the stock.
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