Micron and AMD Post Strong AI-Driven Earnings

Micron Technology and Advanced Micro Devices both posted substantial financial gains in their most recent reporting periods, driven by surging demand for AI infrastructure components. Micron reported third-quarter fiscal 2026 revenues of $41.46 billion, a 346% year-over-year increase, while non-GAAP earnings per share climbed to $25.11 from $1.91 a year earlier. The company’s data center segment generated over $25 billion in revenue, establishing an annualized run rate exceeding $100 billion. Operating cash flow reached $25.39 billion, more than five times the level reported in the same quarter of the previous year.

Advanced Micro Devices reported second-quarter 2026 revenues of $11.54 billion, marking a 50.1% increase year-over-year. Non-GAAP EPS rose 246% to $1.66, supported by strong performance in its Data Center segment, which grew 107.3% to $6.72 billion. This segment now accounts for 58% of AMD’s total company revenues. The company generated $2.36 billion in cash from continuing operations and $1.56 billion in free cash flow during the quarter, reflecting improved profitability alongside its rapid expansion.

Micron Secures Long-Term Memory Contracts

Micron’s growth is anchored by its high-bandwidth memory (HBM) business, where the HBM4 12-high ramp is progressing twice as fast as the previous HBM3E generation. HBM4 revenues have already surpassed $1 billion. The company has signed 16 Strategic Customer Agreements (SCAs), typically covering five-year terms, which represent approximately 20% of DRAM volume and one-third of NAND volume. Fourteen of these agreements include minimum-price commitments totaling about $100 billion in cumulative revenues, providing a stable revenue floor against market volatility.

Management indicated that HBM demand for 2027 and 2028 significantly exceeds current supply capabilities. To address this, Micron is increasing capital expenditures, projecting $10 billion for the fourth quarter of fiscal 2026. Full-year fiscal 2026 capital spending is expected to reach approximately $27 billion. These investments are aimed at expanding capacity to meet long-term demand, although construction spending does not immediately produce bits, creating potential timing risks for free cash flow.

AMD Expands Data Center Compute Share

AMD’s momentum is driven by its Instinct GPUs and EPYC CPUs, which power data center workloads. The company is ramping up its Helios rack-scale platform and expanding partnerships with major AI customers. Anthropic plans to deploy up to 2 gigawatts of MI450 GPUs in Helios systems, while Microsoft is also expanding its use of AMD’s compute solutions. These deployments underscore AMD’s role in providing the processing power necessary for large-scale AI model training and inference.

As detailed in coverage from GN stocks/chips, both companies are positioned to benefit from continued AI infrastructure spending. Micron’s strategy focuses on securing memory supply contracts and expanding production capacity, while AMD concentrates on increasing its share of the AI compute market through GPU deployments. The distinct approaches highlight the different segments of the semiconductor supply chain capturing the current wave of technological investment.

Capital Spending Shapes Future Margins

Micron expects capital expenditures in every quarter of fiscal 2027 to exceed the fiscal 2026 fourth-quarter levels, with more than half of the year-over-year increase coming from construction capex. This heavy investment cycle is necessary to meet the high demand for HBM but introduces execution risks. If industry supply catches up with demand, Micron’s currently high margins could face pressure. Conversely, the long-term agreements provide a buffer, but the timing of bit production relative to construction spending remains a key variable for cash flow stability.

AMD’s financial health is supported by its growing free cash flow generation, which reached $1.56 billion in the latest quarter. The company’s expansion into rack-scale systems and its partnerships with major cloud providers aim to sustain high growth rates in its Data Center segment. Both Micron and AMD are leveraging their respective positions in memory and compute to capitalize on the ongoing expansion of artificial intelligence infrastructure, with their future performance dependent on managing capital intensity and maintaining demand momentum.