Micron Technology reported fiscal Q3 2026 revenue of $41.46 billion, up 346% from $9.3 billion a year earlier. The company's non-GAAP gross margin reached 84.9%, exceeding the 75% Nvidia reported for its most recent quarter.

Nvidia's component bill tells the real story

Nvidia beat revenue expectations with $96.2 billion in quarterly sales but trimmed its gross margin guidance to 74%. In a single quarter, Nvidia's component supply commitments — contractual purchase obligations to its suppliers — grew from $119 billion to $279 billion.

Nvidia expects revenue growth of roughly 70% in fiscal 2028, though memory supply shortages are already driving server price increases above 15%, a sign that memory has moved from commodity afterthought to a decisive cost in AI systems.

Micron's leverage keeps growing

CEO Sanjay Mehrotra confirmed that Micron can currently satisfy only 50% to 67% of customer demand for HBM, the high-bandwidth stacked DRAM packaged alongside the compute engines in AI accelerators to feed them data. HBM is manufactured by only three companies worldwide — Micron, SK Hynix, and Samsung — and additional output requires new fabrication capacity that takes years to build. The company has locked in $100 billion in multi-year contracts, establishing revenue floors and pricing guarantees. Micron's HBM4 shipments have already crossed $1 billion and are ramping at twice the pace of the previous generation. Supply constraints are expected to persist beyond 2027, with only gradual improvements potentially arriving in 2028.

The power dynamic has flipped

Micron's 84.9% gross margin does not simply beat Nvidia's 75%. It also edges past Meta's roughly 82%, placing a memory supplier ahead of both the chip designer and the end customer in profitability terms. That is a sharp break from memory's historical position in the semiconductor industry, where DRAM has long been a boom-and-bust commodity business whose supplier profits swung with the cycle rather than sitting atop it.

Nvidia's move to nearly double its supply commitments in a single quarter signals that Jensen Huang's team is willing to pay to stay ahead, and that willingness to pay is precisely what keeps Micron's margins elevated.

Contract backlog and pricing outlook

The $100 billion contract backlog provides unusual visibility for a memory company. Multi-year take-or-pay agreements — under which customers commit to paying for allocated volumes whether or not they take delivery — position Micron as something closer to a subscription business with hardware delivery obligations, rather than a traditional commodity supplier.

For Nvidia, server prices rising more than 15% due to memory costs could weigh on order growth over time, particularly among smaller cloud providers and enterprise buyers that lack the financial resources of hyperscalers such as Microsoft, Google, and Amazon.