Micron Technology Secures $100 Billion in Long-Term Memory Contracts

Micron Technology is leveraging a global memory chip shortage and the expansion of AI data centers to drive high profitability and long-term growth. The company has secured $100 billion in long-term take-or-pay contracts covering roughly half of its DRAM and NAND volumes, a move expected to stabilize margins above previous cycle peaks even if market prices decline.

For the fourth quarter, the company issued revenue guidance of $50 billion. While this represents a nominal increase, the period includes an additional week, placing actual sequential growth at 12% rather than 21%. Despite a 276% rally year-to-date, the company maintains a forward P/E of 14.3x, with some analysts projecting a target price of $1,500 per share.

To address the supply-demand imbalance, the company is constructing new production facilities, though management estimates supply relief will not arrive until 2028 or later. This shortage is expected to keep chip prices elevated through at least 2027. Wall Street analysts project fiscal year 2027 revenue will reach $245 billion, an 89% increase, supported by an AI build-out that some hyperscalers suggest could continue through 2030.