Micron's Data Center Gross Margin Hit 87% Last Quarter. Here's What It Means for the Stock. - The Motley Fool

Micron Technology reported an impressive gross margin of 87% in its core data center business, a figure that surpasses most software companies. In Q3 2026, the segment generated record revenue of $11.... Read original →

Micron’s 87% data center gross margin stems from the convergence of HBM’s technical moat and surging AI demand. Technologically, HBM3E/HBM4 is forcing rapid scaling of advanced packaging, TSV, and CoWoS capacity—making TSMC and Taiwan-based suppliers critical chokepoints. On compliance, U.S. export controls are accelerating Micron’s shift of HBM production to Japan and the U.S., inflating capex. Competitively, Samsung and SK Hynix are racing toward HBM4 volume, but yield issues limit near-term threats to Micron’s lead. Over the next 12–24 months, even as the broader DRAM cycle softens, HBM’s process complexity and deep customer lock-ins will sustain a ‘structural high-margin tail.’ Yet Micron’s sub-7x P/E reveals investor skepticism: the real bet isn’t on cyclical memory, but whether AI-driven pricing power can become permanent.