Micron Memory Shortage
Micron Now Outearns Apple as Memory Shortage Shifts Tech Profits
Deep News
The memory shortage is redistributing profits across the technology industry. Micron Technology reported net income of $37.7 billion for its fiscal fourth quarter ended September 30, while Apple posted net income of $29.8 billion over the same period — meaning Micron earned roughly $8 billion more in a single quarter.
This reversal is no accident. Market strategist Charlie Bilello summed up the logic in three sentences on X: "Apple needs chips. Micron has chips. Micron sets the price."
He added that Micron's net income "surged 42-fold in just two years to $38 billion — $8 billion more than Apple earned last quarter," and stated bluntly: "We have never seen pricing power like this."
Tech investment analyst Beth Kindig also noted on X: "Micron is now generating more operating profit than Apple."
Micron's Numbers: From the Brink of Losses to Crushing Apple
The speed of Micron's earnings turnaround is staggering.
In fiscal 2024, Micron's normalized earnings per share stood at just $1.30. By fiscal 2026, that figure jumped to $75.52. The 35 analysts covering fiscal 2027 expect earnings per share to reach $176.15 — meaning profits will more than double again within a single year.
Ritholtz Wealth Management CEO Josh Brown publicly commented on Micron's guidance: "Not only has it not been talked down, it's actually being revised higher continuously."
Micron expects fiscal 2027 first-quarter revenue of $61.5 billion, up from the $54.2 billion just reported. CEO Sanjay Mehrotra said directly in a CNBC interview: "The fact is, we simply cannot meet customer demand."
Apple's Cost: Gross Margins Under Sustained Pressure
Micron's pricing power is directly reflected in its customers' bills.
Apple had previously built up an ample buffer through continuously expanding gross margins — rising from 41.8% in fiscal 2021 to 46.9% in fiscal 2025.
But that buffer is being depleted. After excluding the impact of tariff refunds, Apple's gross margin fell from 49.3% in the March quarter to 48.1% in the June quarter, and the company guided for a further decline to approximately 46.5% in the September quarter. Apple management explicitly stated that memory costs were the primary reason for the gross margin decline in the June quarter and a driving factor for continued pressure in the September quarter, and that the buffer effect from previously stockpiled inventory would gradually fade after September.
Former Apple CEO Tim Cook described rising memory prices on the July earnings call as a "once-in-a-century flood."
Apple is not the only major buyer under pressure. Egerton Capital co-founder John Armitage singled out Nvidia on the podcast "In Good Company": "One of the big issues Nvidia faces is memory cost inflation and its impact on bill-of-materials costs." However, he also noted that Nvidia has 75% gross margins, giving it far more room to absorb the shock than Apple.
Valuation: The Market Is Still Discounting
Despite the dramatic jump in profitability, Micron's valuation remains depressed.
Micron currently trades at a forward price-to-earnings ratio of 5.9 times, well below its three-year average of 10.5 times.
The market discount reflects doubts about whether this super-cycle can be sustained. But according to TIKR analysis, as long as demand continues to outpace supply, Micron's pricing power will not disappear. Apple's next earnings report is expected in late October, and whether memory costs are still climbing will be a key signal for the market.
How long Micron's pricing power can last remains an open question.
According to Reuters, 1,994 members of the union at Micron's Taoyuan plant in Taiwan (99% of those who voted) authorized a strike over a bonus dispute. Taiwan is a critical production base for Micron's DRAM and HBM.
However, an authorization vote does not mean an immediate strike — the union said the specific timing and details are still under discussion. And even if workers do walk off the job, it would only further tighten already scarce supply — hardly good news for Apple's memory bill.
As for Apple, it will launch its first foldable phone, the iPhone Duo, on October 23 at a price of $1,999. That may help Apple pass some cost pressure on to consumers — but for now, Apple's own guidance shows it is still absorbing the expense itself.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
