Cloud MemoryNarrow moat

Micron Technology (MU) — moat facet

HBM and hyperscaler memory: from a $768 million loss in 2023 to a 78% operating margin, with one customer at 17% of the company.

The Cloud Memory unit is where Micron's AI business lives. It sells high-bandwidth memory to all data-center customers and other memory to the largest hyperscale clouds.1 It brought in $13,524 million in fiscal 2025, up from $3,792 million in 2024 and $1,872 million in 2023.2

Cloud Memory operating income ($B)-$0.77BFY2023$0.24BFY2024$6.13BFY2025$10.79BQ3 FY26Micron Form 10-K FY2025 and 10-Q, May 2026
One quarter of 2026 earned 1.8 times all of fiscal 2025.

Its profitability has changed faster than any unit's. Gross margin was 3.8% in fiscal 2023, 29.4% in 2024 and 56.6% in 2025; operating income went from a loss of $768 million to profits of $244 million and $6,129 million.34 In the quarter to May 2026 the unit brought in $13,769 million and earned $10,793 million from operations, a 78% margin.56

It is paid largely under multi-year agreements. HBM is qualified into each generation of an accelerator, and in 2026 Micron began signing take-or-pay agreements with committed volumes, most at fixed prices or within price bands.7

It is also where the concentration sits. One customer accounted for 17% of Micron's fiscal 2025 revenue, primarily in this unit.8 The unit spent $1,315 million on research in fiscal 2025, the most of the four.9

Growth has not slowed yet. Revenue was $3,386 million a year earlier, $7,749 million in the February quarter and $13,769 million in May; nine-month revenue was $26,802 million against $8,981 million.1011

This is a narrow moat: HBM is hard to make and Micron is one of three suppliers, but each generation is re-qualified and the buyers are few and large. The figure to follow is the unit's operating margin, 78% in the May 2026 quarter. Holding above 50% as HBM supply catches up would show a real product premium; falling toward the other units would show it was the shortage.

Moat trajectory: Widening

Revenue $13.8B in the May quarter, up fourfold, at a 78% operating margin, with take-or-pay contracts new in 2026.

The number that tests this moat
Moat Explorer calc
Cloud Memory operating margin, latest quarter
78.4% in Q3 FY2026 ($10,793M on $13,769M), from 46.5%

Holding above 50% as HBM supply catches up would show a product premium; converging with the other units would show it was the shortage.

How it's calculated: 10,793 / 13,769; 1,573 / 3,386.
Source: Micron Form 10-Q, May 2026 (Moat Explorer calc) ↗
References
  1. ReportedIt sells high-bandwidth memory to all data-center customers and other memory to the largest hyperscale clouds.
    Micron Form 10-Q, quarter ended 28 May 2026 - revenue $41,456M ($9,301M); cost of goods sold $6,400M ($5,793M); gross margin 84.6%; operating income $33,318M; net income $28,243M; DRAM $31,328M, NAND $9,943M; business units CMBU $13,769M, CDBU $11,524M, MCBU $11,521M, AEBU $4,634M with segment operating income; nine-month revenue $78,959M, operating income $55,589M, R&D $3,737M, capex $19,602M, government incentives $2,989M, income tax $8,178M; take-or-pay strategic customer agreements with remaining performance obligations of about $5 billion (about one-third within twelve months), $422M in contract liabilities — Q3 FY2026 · publ. June 2026 · source ↗
  2. ReportedIt brought in $13,524 million in fiscal 2025, up from $3,792 million in 2024 and $1,872 million in 2023.
    Micron Form 10-K, FY2025 - revenue $37,378M/$25,111M/$15,540M; DRAM $28,578M/$17,603M/$10,978M; NAND $8,503M/$7,227M/$4,206M; operating income $9,770M/$1,304M/-$5,745M; R&D $3,798M/$3,430M; capex $15,857M/$8,386M/$7,676M; government incentives received $2,005M/$315M/$710M; business units (CMBU $13,524M/$3,792M/$1,872M, CDBU $7,229M/$4,984M/$2,124M, MCBU $11,859M/$11,667M/$7,394M, AEBU $4,753M/$4,631M/$4,139M) with segment gross margin and operating income; one customer 17% of 2025 revenue; revenue by customer headquarters (U.S. $24,113M, Mainland China $2,639M) — FY2023-FY2025 · publ. October 2025 · source ↗
  3. ReportedGross margin was 3.8% in fiscal 2023, 29.4% in 2024 and 56.6% in 2025; operating income went from a loss of $768 million to profits of $244 million and $6,129 million.
    Micron Form 10-K, FY2025 - revenue $37,378M/$25,111M/$15,540M; DRAM $28,578M/$17,603M/$10,978M; NAND $8,503M/$7,227M/$4,206M; operating income $9,770M/$1,304M/-$5,745M; R&D $3,798M/$3,430M; capex $15,857M/$8,386M/$7,676M; government incentives received $2,005M/$315M/$710M; business units (CMBU $13,524M/$3,792M/$1,872M, CDBU $7,229M/$4,984M/$2,124M, MCBU $11,859M/$11,667M/$7,394M, AEBU $4,753M/$4,631M/$4,139M) with segment gross margin and operating income; one customer 17% of 2025 revenue; revenue by customer headquarters (U.S. $24,113M, Mainland China $2,639M) — FY2023-FY2025 · publ. October 2025 · source ↗
  4. Moat Explorer calcGross margin was 3.8% in fiscal 2023, 29.4% in 2024 and 56.6% in 2025; operating income went from a loss of $768 million to profits of $244 million and $6,129 million.
    Moat Explorer calculation from Micron's Forms 10-K FY2021-FY2025 and 10-Qs for fiscal 2026: margins, shares and growth rates as stated — 2019 to Q3 FY2026 · publ. 2026-09-23 · source ↗
  5. ReportedIn the quarter to May 2026 the unit brought in $13,769 million and earned $10,793 million from operations, a 78% margin.
    Micron Form 10-Q, quarter ended 28 May 2026 - revenue $41,456M ($9,301M); cost of goods sold $6,400M ($5,793M); gross margin 84.6%; operating income $33,318M; net income $28,243M; DRAM $31,328M, NAND $9,943M; business units CMBU $13,769M, CDBU $11,524M, MCBU $11,521M, AEBU $4,634M with segment operating income; nine-month revenue $78,959M, operating income $55,589M, R&D $3,737M, capex $19,602M, government incentives $2,989M, income tax $8,178M; take-or-pay strategic customer agreements with remaining performance obligations of about $5 billion (about one-third within twelve months), $422M in contract liabilities — Q3 FY2026 · publ. June 2026 · source ↗
  6. Moat Explorer calcIn the quarter to May 2026 the unit brought in $13,769 million and earned $10,793 million from operations, a 78% margin.
    Moat Explorer calculation from Micron's Forms 10-K FY2021-FY2025 and 10-Qs for fiscal 2026: margins, shares and growth rates as stated — 2019 to Q3 FY2026 · publ. 2026-09-23 · source ↗
  7. ReportedHBM is qualified into each generation of an accelerator, and in 2026 Micron began signing take-or-pay agreements with committed volumes, most at fixed prices or within price bands.
    Micron Form 10-Q, quarter ended 28 May 2026 - revenue $41,456M ($9,301M); cost of goods sold $6,400M ($5,793M); gross margin 84.6%; operating income $33,318M; net income $28,243M; DRAM $31,328M, NAND $9,943M; business units CMBU $13,769M, CDBU $11,524M, MCBU $11,521M, AEBU $4,634M with segment operating income; nine-month revenue $78,959M, operating income $55,589M, R&D $3,737M, capex $19,602M, government incentives $2,989M, income tax $8,178M; take-or-pay strategic customer agreements with remaining performance obligations of about $5 billion (about one-third within twelve months), $422M in contract liabilities — Q3 FY2026 · publ. June 2026 · source ↗
  8. ReportedOne customer accounted for 17% of Micron's fiscal 2025 revenue, primarily in this unit.
    Micron Form 10-K, FY2025 - revenue $37,378M/$25,111M/$15,540M; DRAM $28,578M/$17,603M/$10,978M; NAND $8,503M/$7,227M/$4,206M; operating income $9,770M/$1,304M/-$5,745M; R&D $3,798M/$3,430M; capex $15,857M/$8,386M/$7,676M; government incentives received $2,005M/$315M/$710M; business units (CMBU $13,524M/$3,792M/$1,872M, CDBU $7,229M/$4,984M/$2,124M, MCBU $11,859M/$11,667M/$7,394M, AEBU $4,753M/$4,631M/$4,139M) with segment gross margin and operating income; one customer 17% of 2025 revenue; revenue by customer headquarters (U.S. $24,113M, Mainland China $2,639M) — FY2023-FY2025 · publ. October 2025 · source ↗
  9. ReportedThe unit spent $1,315 million on research in fiscal 2025, the most of the four.
    Micron Form 10-K, FY2025 - revenue $37,378M/$25,111M/$15,540M; DRAM $28,578M/$17,603M/$10,978M; NAND $8,503M/$7,227M/$4,206M; operating income $9,770M/$1,304M/-$5,745M; R&D $3,798M/$3,430M; capex $15,857M/$8,386M/$7,676M; government incentives received $2,005M/$315M/$710M; business units (CMBU $13,524M/$3,792M/$1,872M, CDBU $7,229M/$4,984M/$2,124M, MCBU $11,859M/$11,667M/$7,394M, AEBU $4,753M/$4,631M/$4,139M) with segment gross margin and operating income; one customer 17% of 2025 revenue; revenue by customer headquarters (U.S. $24,113M, Mainland China $2,639M) — FY2023-FY2025 · publ. October 2025 · source ↗
  10. ReportedRevenue was $3,386 million a year earlier, $7,749 million in the February quarter and $13,769 million in May; nine-month revenue was $26,802 million against $8,981 million.
    Micron Form 10-Q, quarter ended 26 February 2026 - revenue $23,860M ($8,053M); six months $37,503M ($16,762M); CMBU $7,749M — Q2 FY2026 · publ. March 2026 · source ↗
  11. ReportedRevenue was $3,386 million a year earlier, $7,749 million in the February quarter and $13,769 million in May; nine-month revenue was $26,802 million against $8,981 million.
    Micron Form 10-Q, quarter ended 28 May 2026 - revenue $41,456M ($9,301M); cost of goods sold $6,400M ($5,793M); gross margin 84.6%; operating income $33,318M; net income $28,243M; DRAM $31,328M, NAND $9,943M; business units CMBU $13,769M, CDBU $11,524M, MCBU $11,521M, AEBU $4,634M with segment operating income; nine-month revenue $78,959M, operating income $55,589M, R&D $3,737M, capex $19,602M, government incentives $2,989M, income tax $8,178M; take-or-pay strategic customer agreements with remaining performance obligations of about $5 billion (about one-third within twelve months), $422M in contract liabilities — Q3 FY2026 · publ. June 2026 · source ↗
Sources
Generated September 23, 2026