Micron’s Results Show Why HBM4 Can Be Worth 15 Times Its Weight in Gold

A remarkable period for memory makers

HBM stacked DRAM may become one of the most profitable products in the six-decade history of commercial information technology. IBM’s mainframe engines from the 1970s may belong in the same discussion, depending on how costs and revenues are allocated. However, the revenue and profit generated by HBM packaging appear to exceed those associated with the monolithic systems technology packaging of the System/370 in the 1970s and the thermal conduction module packaging of the System/3081 in the 1980s.

The comparison highlights the continuing value of advanced packaging. The HBM market, along with the revenues of Micron Technology, Samsung, and SK Hynix, is growing much faster than the IBM mainframe business ever did. This growth also supports Nvidia and AMD. Without high-bandwidth stacked DRAM, the current generative AI expansion would not have been possible.

Micron’s fiscal 2026 ended on September 3, and its results were unusually strong. In the quarter, revenue increased 4.8 times year over year to $54.23 billion. Operating income rose nearly 12 times from the year-ago period to $43.75 billion, while net income also increased 12 times to $37.7 billion. Micron brought 69.5 percent of revenue to the bottom line.

The company had $73.45 billion in cash, up 7.6 times from a year earlier, theoretically enough to build nearly four fabs. Nevertheless, it spent $10.77 billion on capital expenditures. New memory fabs take years to plan, construct, and bring online, so manufacturers cannot quickly increase supply in response to demand. Memory makers also expect demand related to AI to remain strong through at least 2028 and probably into 2030, reducing the incentive to create a new oversupply cycle.

DRAM and flash growth

The memory industry has historically been affected by boom-and-bust cycles. DRAM and flash suppliers are therefore cautious about adding too much capacity while shortages and high demand are increasing prices and profits. Even if a new fab could be built and ramped within a year, manufacturers might still expand more slowly because prices per unit of capacity continue to rise.

Micron’s DRAM business includes low-power LPDDR, server memory based on conventional DRAM, and standard DRAM for PCs, tablets, and smartphones. DRAM revenue increased 4.4 times to $39.77 billion in the quarter. Despite the impact of rising HBM prices, DRAM was not the company’s fastest-growing product line. Flash non-volatile storage revenue rose 6.2 times to $14.1 billion.

If manufacturing capacity were not a constraint, flash would still require years to catch up with DRAM revenue. NAND flash fabs are easier and less expensive to add for each dollar of capital expenditure, however, so Micron is expected to expand that business as quickly as practical. DRAM fabs are more expensive and difficult to bring online, especially because of their clean-room requirements.

Micron chief technology officer Scott DeBoer told financial analysts that the company remains two generations ahead of ChangXin Memory Technologies (CXMT), China’s growing domestic memory producer. CXMT went public on the Shanghai Stock Exchange in July and raised $8.6 billion. China is pursuing domestic memory production and intends to sell memory globally, although CXMT’s current funding is small compared with the profits being generated by its larger competitors.

Datacenter revenue and margins

Micron’s Cloud Memory business, which is dominated by HBM, is smaller than its Core Datacenter business, where conventional DRAM and flash are reported. Both units are growing rapidly and generating substantial profits.

In fiscal Q4, Cloud Memory sales reached $16.28 billion, up 3.6 times year over year and 18.3 percent sequentially. Gross income was $13.52 billion, or 83 percent of sales, while operating income was $12.38 billion, or 76 percent of sales. Gross income increased five times year over year, and net income grew 4.7 times.

Micron chief financial officer Mark Murphy said DRAM bits shipped increased by a single-digit percentage in Q4, while prices rose in the high-teens percentage range. Flash bits shipped increased 10 percent year over year, and prices rose 30 percent. These figures cover all products, so price increases for HBM, LPDDR, and high-end server DRAM may have been greater than the overall averages.

The Core Datacenter business increased 11 times year over year to slightly more than $18 billion. DRAM and flash are key components in AI clusters used for training, inference, and AI sandboxes that execute agentic AI code and tools.

Combined datacenter revenue rose 5.6 times to $34.29 billion, representing 35.6 percent sequential growth. Operating income from datacenter products increased 10.7 times to $27.68 billion, equal to 81 percent of datacenter product revenue.

Micron’s mobile, client, automotive, and embedded businesses also generated significant revenue and profit, helping fund development of its datacenter products. However, the datacenter figures illustrate the scale of the current memory cycle.

Estimated HBM contribution

Micron no longer provides detailed results for HBM, high-end server DRAM, and LPDDR separately. Based on the company’s reported data and broader industry trends, one estimate places HBM revenue at $14.33 billion in fiscal Q4, up 7.6 times year over year. High-capacity server DIMMs and LPDDR together may have generated $8.05 billion, up 6.1 times from Q4 fiscal 2025. The remaining DRAM revenue is estimated at $17.39 billion, or 3.1 times the year-ago figure.

Micron plans to increase HBM pricing in 2027, bringing its profit profile closer to that of conventional DRAM. Chief executive officer Sanjay Mehrotra said the company had completed agreements covering the vast majority of its calendar 2027 HBM bit supply, with significant year-over-year price increases that narrow the gross-margin gap with conventional DRAM.

The HBM4 ramp is also progressing, and Micron has described a roadmap for future HBM products. This includes work with Nvidia on the industry’s first custom-HBM4E implementation, NVHBM, for next-generation GPUs and NVLink Fusion platforms.

Mehrotra said memory and flash supply constraints would be tighter in calendar 2027 and 2028 than in calendar 2026. Micron expects DRAM bits shipped to grow in the mid-20s percentage range in calendar 2026, followed by growth in the low 20s percentage range in 2027 and 2028. Flash capacity shipped is expected to grow in the low 20s percentage range in 2026 and the mid-20s percentage range in 2027 and 2028.

Flash manufacturing is less expensive and easier to expand than DRAM manufacturing. HBM capacity is becoming more difficult to increase because taller DRAM stacks operating at higher speeds have a greater risk of manufacturing failure. Micron said fiscal 2027 capital expenditure would increase, with the additional spending focused on expanding DRAM output as the company moves toward HBM4E and HBM5. Higher speeds and taller stacks reduce yields, increasing the amount of DRAM consumed by failed stacks.

Customer prepayments and future commitments

Micron’s customers have made $32 billion in prepayments to secure memory and flash supplies. The company has signed 26 supplier agreements covering approximately 35 percent of its revenue between now and fiscal 2030. Mehrotra said agreements could eventually cover about half of sales.

Micron has $150 billion in remaining performance obligations, commonly described as revenue backlog. This figure includes contracts with fixed price floors and committed volumes. Other agreements without fixed pricing or committed volumes may also exist, although the current market makes such terms less likely.

For fiscal Q1 2027, Micron forecast sales of $61.5 billion, plus or minus $1.5 billion. That would represent 13 percent sequential growth and a 4.5-times increase from the $13.64 billion reported in fiscal Q1 2025.

HBM4 compared with gold

A twelve-high HBM stack may weigh approximately one-quarter of a gram and cost between $500 and $600, depending on the customer and purchase volume. At that weight, approximately 125 stacks would be needed to equal one troy ounce of HBM4.

That produces a value of roughly $62,500 to $75,000 per troy ounce. With gold trading at $4,176 per troy ounce when the figures were reported, an HBM4 stack would be worth approximately 15 to 18 times its weight in gold.

The calculation illustrates how the generative AI boom has transformed the economics of advanced memory and packaging for Micron and the wider memory industry.