Micron Technology (MU -1.49%) will report its fiscal 2026 fourth-quarter earnings results on Sept. 30. While the report could move Micron's stock significantly, the Federal Reserve's next interest rate decision, scheduled for Sept. 16, could have an even bigger impact. Wall Street now sees a more than 60% chance of an interest rate hike in September 2026, up from 41.4% a week earlier. The shift followed Federal Reserve Chairman Kevin Warsh's hawkish comments at the Jackson Hole symposium.
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Micron has already guided for exceptionally strong Q4 results. However, the bigger question for investors is how long the memory boom can persist.
Strong earnings performance
Micron's Q3 results were exceptionally strong. Revenue surged 346% year over year to $41.5 billion, while operating cash flow was $25.4 billion. Management expects Q4 revenue of $49 billion to $51 billion and non-GAAP earnings per share (EPS) of $30 to $32.
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Key Data Points
Micron's growth is being driven heavily by higher pricing. DRAM (dynamic random-access memory) revenue rose 343% year over year to $31.3 billion, while NAND revenue soared 361% year over year to $9.9 billion in Q3. DRAM prices rose in the low-60% range sequentially, and NAND prices jumped in the mid-80% range as tight supply gave memory makers enormous pricing power.
The memory shortage is not confined to high-bandwidth memory (HBM) or artificial intelligence (AI) data centers. Micron's Mobile and Client business generated $11.5 billion in Q3 revenue and an 87% gross margin. This shows that favorable memory pricing is benefiting other parts of the business as well.
Higher rates may not directly weaken Micron's business
An interest rate hike will not suddenly create more DRAM or HBM supply, nor is it likely to stop AI spending immediately. Nvidia expects roughly 70% revenue growth in fiscal 2028. SK Hynix expects the memory shortage could last through 2030.
Micron is also trying to make this memory cycle less volatile than previous ones. The company's new strategic customer agreements require customers to commit to specific purchase volumes over several years. Most of these contracts either have fixed prices or set minimum and maximum prices. Micron also claims that even at the minimum prices, contracts with these pricing ranges should generate gross margins well above the company's peak quarterly margins in any previous memory cycle.
These agreements should also strengthen Micron's financial position. The company expects $22 billion of customer deposits and related financial commitments under the agreements, including about $18 billion in cash deposits. Micron also exited Q3 with $30.1 billion of cash and marketable investments and just $5.7 billion of debt.
Hence, higher interest rates are unlikely to hurt Micron primarily through its own borrowing costs.
Investors may perceive more risk
Micron is trading at roughly 6.2 times Wall Street's fiscal 2027 consensus earnings estimate of $155 per share (as of Aug. 31, 2026).
The low valuation multiple implies that investors are still not valuing Micron as a typical high-growth AI stock. Instead, the valuation suggests that investors remain concerned about whether today's extraordinary memory profits will last. This is driving the September risk for Micron.
Assume Wall Street raises its fiscal 2027 earnings estimate by 10%. If Micron continues trading at the same earnings multiple, the stock could rise by roughly the same amount. But if a more hawkish-than-expected Federal Reserve decision causes the forward-earnings multiple to fall by 10%, almost all that benefit disappears. A 15% decline in the multiple would leave the stock lower even after the 10% increase in expected earnings.
Hence, the Federal Reserve does not need to weaken Micron's near-term results to hurt the stock. It only needs to make investors less confident that today's strong memory profits can last.
What September could reveal about Micron
History also suggests that higher interest rates alone may not determine Micron's performance. During its last major downturn, the memory market itself weakened sharply as customers reduced inventories and DRAM and NAND prices fell. Micron's revenue dropped 49% year over year, while gross margin fell year over year from 45% to negative 9% in fiscal 2023 (ending Aug. 31, 2026).
Hence, September 2026 could prove an interesting test. Memory pricing is currently rising rather than falling, and demand remains constrained by tight supply. If a hawkish Federal Reserve decision pushes interest rates higher and causes investors to question how long today's strong memory pricing can last, Micron's stock could fall even if the company later reports another strong quarter.
