Micron TechnologyNarrow moat

Micron makes memory — the chips that hold a computer's working thoughts and its stored ones. Two products, both commodities by birth: DRAM, the fast working memory that every processor needs beside it, and NAND flash, the storage that remembers when the power goes off. Micron is one of only three companies on earth that can make leading-edge DRAM and the only American one. The business model is brutally simple and brutally hard: spend tens of billions on fabs, shrink the transistor faster than the price of a bit falls, and sell into a market whose price you do not set. When bits are scarce the profits are astonishing; when they glut, the same fabs produce the same wafers at a loss.

The money now comes overwhelmingly from one place. Of fiscal 2025's $37.4 billion in revenue — up 49% in a year¹ — roughly $22 billion came from the Compute & Networking unit: DRAM and high-bandwidth memory (HBM) sold into data centers, well over half the company and the fastest-growing part of it. Mobile memory for phones added about $6.5 billion, Storage — mostly NAND solid-state drives — about $5.9 billion, and Embedded memory for cars and industry about $3 billion. Five years ago those four buckets were comparably sized; the AI data center has since swallowed the company's center of gravity.

What happened next has no precedent in the industry's history. As the AI build-out collided with tight supply, quarterly revenue ramped from $11 billion to a record $41.5 billion in the May 2026 quarter, with GAAP gross margin reaching 84.6% and the next quarter guided near $50 billion² — software margins, earned on a commodity. Over the trailing year Micron booked roughly $90 billion of revenue and $50 billion of net income. Remember what this same company reported three years earlier: a $5.8 billion annual loss in the fiscal 2023 memory bust³. Same fabs, same engineers, same product. The price of a bit did both.

That whiplash is the honest description of how Micron makes money: it operates enormous fixed costs into a cyclical price it cannot control, and its results are the cycle's amplitude passed through a fixed-cost lever. What is genuinely new is the top of the stack — HBM, the stacked DRAM wired into AI accelerators, now sells out a year in advance on multi-year contracts at negotiated prices, the first time any slice of the memory business has been sold like enterprise software rather than auctioned like wheat.

The market prices the tension honestly: about $1.24 trillion of market value, yet about 25 times trailing earnings and 7.5 times forward⁴ — a multiple that low on profits that high being the market's way of saying it expects them to revert. Whether it is right is the whole Micron question. The pages that follow take it in two parts: the moat — what an oligopoly, a technology treadmill and an American flag actually protect — and the future bets, where Micron is spending this boom's cash to make the next bust shallower. Each of the four business units is taken in turn in The Revenue Lines.