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Micron (MU) delivered a historic performance for 1Q26, solidifying its position alongside NVIDIA (NVDA) as a dominant force in the AI ecosystem. The company shattered estimates for both revenue and earnings while providing a Q2 outlook that far exceeded market expectations. The blowout results have provided a significant lift to peer memory and storage stocks, including Sandisk (SNDK), Seagate Technology (STX) and Western Digital (WDC), as the market recognizes a broad structural shift in data storage demand driven by AI.

• The centerpiece of the report was the massive expansion in non-GAAP gross margin, which rose to 56.8% from 45.7% a year earlier. Guidance for Q2 projects a further leap to 68.0% (+/- 1.0%), driven by high-value products and extreme supply tightness.
• The dramatic rise in gross margins is primarily attributed to outsized demand from AI hyperscalers, which has created a tight supply environment for advanced memory like DDR5 and HBM.
• As manufacturers shift capacity to high-margin AI products, shortages have emerged in traditional segments, providing further upward pressure on pricing across the board.
• MU anticipates a multi-year "super cycle" in memory, with favorable supply/demand dynamics expected to persist through calendar 2026 and likely into 2027.
• Revenue in the Cloud Memory segment surged by 99% yr/yr to $5.28 bln, fueled by the rapid build-out of AI infrastructure by data center customers.
• Within Cloud Memory, High-bandwidth memory (HBM) remains the core growth driver. MU has already secured price and volume agreements for its entire calendar 2026 HBM supply.
• The company is making rapid progress on its next-generation HBM4, which is on track to ramp with high yields in 2Q26.
• The total addressable market for HBM is now projected to reach $100 bln by 2028, two years earlier than previously forecast.
• Revenue in Mobile and Client jumped 63% to $4.26 bln, as the integration of AI capabilities into smartphones and PCs (AI at the "edge") requires significantly higher memory content per device.

Briefing.com Analyst Insight:

MU has effectively silenced any remaining doubts regarding the durability of the AI-driven memory cycle. By delivering record-breaking results and guidance that wasn't in the same orbit as prior estimates, the company has transitioned from a cyclical recovery story to a secular growth powerhouse. While traditional consumer segments like PCs and smartphones remain more balanced, the shift toward AI-heavy configurations is creating a pricing floor that benefits the entire industry. The primary risk remains the potential for eventual oversupply if capital expenditures -- which MU hiked to $20 bln -- outpace long-term demand. However, with 2026 supply already effectively sold out and HBM4 on the horizon, MU currently commands a "strategic asset" status that justifies its recent valuation surge. In short, MU and NVDA currently represent the "gold standard" for play in AI infrastructure.