NEW YORK, July 20, 2026, 10:11 a.m. EDT. Major U.S. cash equity markets have opened.
- Micron gained 4.6% to approach $888 following losses over the previous three sessions.
- Initial estimates show annualized Q4 guided EPS at 7.2 times, compared with 13.9 times for annualized Q3 adjusted free cash flow.
Shares of Micron Technology NASDAQ:MU rose 4.6% on Monday, bouncing back after last week’s decline. This uptick came amid new warnings that memory prices are now at unusual highs.
Two metrics yield contrasting valuations. Q4 guidance suggests a multiple of roughly 7.2 based on annualized earnings, while Q3 cash generation points to a multiple of around 13.9 on annualized free cash flow.
The gap is significant as capital expenditures are increasing. Gross margin for Q3 hit an all-time high of 84.9%.
| Measure | Company figure | Preliminary market read-through |
|---|---|---|
| Q4 adjusted EPS | $31 per quarter | 7.2 times annualized earnings |
| Q3 adjusted free cash flow | $18.3 billion | 13.9 times annualized cash flow |
| Minimum contract revenue | Roughly $100 billion | 2.0 quarters worth of Q4 sales |
Initial estimates are based on Micron’s Q4 midpoint, Q3 cash flow, and its $1.02 trillion market capitalisation. The cash-flow multiple is calculated from Q3 data, as Micron did not report a Q4 cash flow figure.
The agreements represent significant deals, yet leave some areas uncovered. Sixteen contracts account for approximately 20% of DRAM volume and a third of NAND, with most extending to 2030. Fourteen of these include minimum revenues totaling around $100 billion.
Micron anticipates that following the planned agreements, at least half of its revenue will come from such deals. This goal is higher than the current coverage secured.
Micron projects fourth-quarter revenue at $50 billion, an increase of 20.6% over Q3. The company forecasts adjusted EPS at $31, a rise of 23.5%. Gross margin is expected to improve by 1.1 percentage points, reaching approximately 86%.
The company anticipates a “meaningful moderation” in price hikes. Capital expenditures for Q4 are projected to total around $10 billion, representing an increase of about 41% over Q3. The firm expects quarterly capex to rise again in fiscal 2027.
CEO Sanjay Mehrotra anticipates “tight conditions to persist beyond calendar 2027.” Micron projects a significant rise in Q4 free cash flow but did not provide a specific estimate.
SK Hynix KRX:000660 Chairman Chey Tae-won provided a contrasting view. “Prices have to come down,” he said. He anticipates AI-memory demand will climb between 60% and 100% in the next year, while supply is set to see minimal increase. Hani
Tension contributed to Monday’s rebound and the volatility during the month. Demand is strong. Producers continue to view price normalization as required.
Samsung Electronics KRX:005930 posted a 19-fold surge in operating profit for the second quarter. However, shares declined following the announcement. The sector’s pullback has persisted despite robust earnings.
The PHLX semiconductor index has fallen 18% so far in July, although it is still higher by 65% for the year. Analyst estimates project chip earnings will increase 133%, and volatility in prices is still notably high.
“This chip demand for AI is not a forever scenario,” said Jake Dollarhide, chief executive at Longbow Asset Management. “Anybody who disappoints is going to get clobbered.” Reuters
Micron did not repurchase any shares in Q3. The company intends to increase capital returns after December 9, marking two years since its finalised CHIPS agreements. Executives anticipate distributing surplus cash progressively.
Risks persist. A sudden fall in AI expenditure could impact memory pricing. Increased capacity growth may accelerate the downturn.
Currently, the rebound is supported by robust guidance. Investors are monitoring contract conversion and cash flow as pricing eases. That examination has just begun.
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