Micron Q3 Blowout Reignites the AI Rally as Apple Hikes Mac Prices

Micron crushed Q3 with $41.46B revenue and a $50B Q4 guide, restarting the AI memory trade. Apple hiked Mac prices. May PCE in line at 4.1%.

TLDR

• Micron Q3 FY26 crushed it: record $41.46B revenue (vs $35.85B est), $25.11 non-GAAP EPS (vs $20.78 est), 84.9% gross margin – the strongest quarter in company history
• Q4 guide is even bigger: $50B revenue (vs $43.58B est) and $30-32 EPS (vs $24.80 est); 16 strategic customer agreements lock in ~20% of DRAM and one-third of NAND volume through 2030; MU up ~14-17% premarket to roughly $1,200
• Qualcomm doubled FY29 non-handset revenue target to $40B at its Investor Day, with Meta on Dragonfly C1000 CPUs and Microsoft Azure on High Bandwidth Compute; QCOM premarket +12-15%
• May PCE landed in line: headline 4.1% YoY (highest since April 2023, vs 4.1% est), core 3.4% YoY (vs 3.3% est); markets held September hike odds at 65-70%
• Asia ripped on Micron readthrough: Kospi +5.42% at 8,930 with SK Hynix +13.91% to a record high; Nikkei +4.61% reclaiming 70,000; Kioxia +12%
• Apple down 4-5% after hiking MacBook and iPad prices, citing memory cost surge; the AI memory squeeze just hit consumer hardware margins
• Oil keeps falling on Hormuz reopening: WTI under $71, Brent under $74; Bitcoin near $61,066

Market Regime

Tuesday’s AI memory bubble fear is dead on arrival. Micron didn’t just beat – it printed the strongest quarter in its history at 84.9% gross margin, signed 16 strategic customer agreements that take or pay through 2030, and guided Q4 revenue to $50B against a $43.58B consensus. Qualcomm followed with Meta and Microsoft as anchor data center customers and a doubled 2029 non-handset target. Two days after the worst day for global semis in three months, the bid is back across the entire AI supply chain and the Kospi has already retraced more than two-thirds of its circuit-breaker session.

The asymmetry has flipped. Tuesday’s selloff was about supply concern; today’s setup is about who cannot get supply. Apple’s Mac and iPad price hike is the first big-tech admission that the memory crunch has reached consumer hardware margins, and CEO Sanjay Mehrotra said on the Micron call that new fab output will not be meaningful until fiscal 2028. May PCE landed exactly in line at 4.1% headline and 3.4% core, which kept the September hike trade where it was without accelerating it. The path of least resistance is back to memory leaders, AI infra, and semi capex names. The next macro test is July 14 CPI.

Bullish Factors

• Micron Q3 record: $41.46B revenue, $25.11 non-GAAP EPS, 84.9% gross margin; Cloud Memory unit revenue $13.77B at 83% GM – the strongest quarter in company history
• Q4 guide: $50B revenue and $30-32 EPS, both far above Street; 16 SCAs cover roughly 20% of DRAM and a third of NAND volume through 2030, with floor prices guaranteeing margins above any past peak
• Qualcomm doubled FY29 non-handset target to $40B; Meta committed to Dragonfly C1000 CPUs in 2028; Microsoft Azure on High Bandwidth Compute in 2027; two more hyperscalers signed; $3.92B Modular acquisition deepens the data center software stack
• Kospi +5.42% with SK Hynix +13.91% to a record high; Nikkei +4.61% reclaiming 70,000; foreign investors net buyers in Japan at 479.4 billion yen weekly inflow
• May PCE in line at 4.1% headline and 3.4% core – kept Fed hike odds at 65-70% for September with no acceleration
• Strait of Hormuz reopening on track; WTI under $71, Brent under $74; the war-driven energy leg of inflation is easing

Bearish Factors

• Headline PCE at 4.1% YoY is the highest since April 2023; 9 of 18 Fed officials still see at least one rate hike this year and BofA expects 25 bps each in September, October, and December
• Apple down 4-5% on MacBook and iPad price hikes; DRAM prices rose as much as 98% in Q1 2026 and TrendForce sees another 58-63% rise this quarter – the memory squeeze is now a Mag7 margin problem
• Durable goods orders fell 4.5% in May, snapping two consecutive monthly increases
• Breadth is uneven: small caps and chips leading at the open, but most Mag7 names sinking on the Apple readthrough – the rally is concentrated, not broad
• Cerebras down 11% on its first earnings as a public company with a soft core gross margin guide – a reminder that the AI tape rewards leaders and punishes everyone else
• 2-year Treasury still near cycle highs; the hike-by-September trade is intact even with an in-line PCE

Asian Markets This Morning

Asia ripped on the Micron readthrough. South Korea’s Kospi closed up 5.42% at 8,930, the second straight session of recovery after Tuesday’s circuit-breaker rout. SK Hynix gained 13.91% to a fresh record high, lifted by both the Micron beat and confirmation that its US ADR listing will raise up to KRW 45.5 trillion-around $33B to fund HBM and AI chip capacity. Samsung Electronics added 5.29% on follow-through from Wednesday’s 90 trillion won buyback. Japan’s Nikkei 225 jumped 4.61% to 72,360, reclaiming the 70,000 level on a wave of foreign buying confirmed by a 479.4 billion yen net inflow last week. Kioxia rose more than 12% on a reported US listing by 2027. The synchronized rally has now reversed roughly two-thirds of Tuesday’s damage in the regional AI complex.

What Moved Wall Street Today

Wednesday’s session closed mixed but the after-hours print was the only thing that mattered. The Nasdaq Composite slipped 0.43% to 25,476.64, the S&P 500 fell 0.10% to 7,358.22, and the Dow added 0.35% to 51,848.90 as traders sat on hands ahead of Micron. Then it hit. Micron quadrupled YoY revenue to $41.46B, set a company gross margin record at 84.9%, and guided Q4 revenue to $50B against a $43.58B consensus. The stock jumped roughly 14% in extended trade to approximately $1,192. Qualcomm followed at its 2026 Investor Day with a doubled FY29 non-handset target, Meta and Microsoft as data center anchors, and a $3.92B all-stock acquisition of AI software firm Modular. QCOM ran 12-15% premarket.

Thursday opened with the AI complex reignited but rotation visible. Sandisk +14.7%, Micron +12%, Qualcomm +9% to +12%, with KLA, Applied Materials, Lam Research, Western Digital up in sympathy. Russell 2000 led the indices at +1.29%, Dow +1.13% on industrials, healthcare, and financials. The S&P 500 was up just 0.31% and the Nasdaq up only 0.24% – held back by Apple down 4-5% after raising the MacBook Neo starting price from $599 to $699 and the M3 Ultra Mac Studio by $1,300 to $5,299, citing memory and storage cost pressure. Other Mag7 names lagged in sympathy. May PCE landed in line at 8:30 AM ET: 4.1% headline-highest since April 2023 and 3.4% core. Durable goods fell 4.5% in May. Initial jobless claims dropped to 215,000. Oil kept sliding, with WTI below $71 and Brent below $74; Bitcoin traded near $61,066.

Assets in Focus

Micron (MU)

Reported Q3 FY26 results that beat across every line. Revenue of $41.46B versus $35.85B consensus, GAAP EPS of $24.67, non-GAAP EPS of $25.11 versus $20.78 expected. Gross margin of 84.9% is a company record. Cloud Memory Business Unit revenue hit $13.77B at an 83% gross margin. Q4 guide is the bigger number: $50B revenue and $30-32 non-GAAP EPS, both well above Street. CEO Sanjay Mehrotra said on the call that the company has no line of sight on when supply will catch up with demand, and that new fab output will not be meaningful until fiscal 2028. 16 strategic customer agreements – five-year take-or-pay deals from CY2026 through 2030 – cover roughly 20% of DRAM volume and one-third of NAND volume, with floor prices that guarantee margins above any past peak. Stock was up roughly 12-17% in early Thursday trade, trading around $1,200.

Qualcomm (QCOM)

2026 Investor Day delivered a fundamental repricing. FY29 non-handset revenue target raised to $40B from a prior $22B, with a data center sub-target of $15B+. Meta committed to Dragonfly C1000 CPUs by 2028; Microsoft Azure tapped the High Bandwidth Compute architecture for mid-2027; two unnamed hyperscalers also signed. Non-GAAP EPS target of more than $18 for FY29 versus LSEG consensus of $15.26. Separately, Qualcomm announced a $3.92B all-stock acquisition of AI software firm Modular to deepen the data center inference and orchestration stack. Premarket pop of 12-15%, with the stock building back from its April low.

Apple (AAPL)

Down 4-5% in early trade after raising prices on MacBook and iPad lines. The MacBook Neo starting price went from $599 to $699; the M3 Ultra Mac Studio rose $1,300 to $5,299. Apple cited surging memory and storage costs – DRAM prices up as much as 98% in Q1 2026 per TrendForce, with another 58-63% rise projected this quarter. The iPhone is unaffected for now. This is the first big-tech admission that the AI-driven memory squeeze has reached consumer hardware margins, and it sets up an AAPL margin watch into the next quarter. Counterpoint Research notes memory and storage prices have quadrupled in the past three quarters.

SK Hynix (SKHX)

Closed up 13.91% in Seoul on the Micron readthrough, hitting a fresh record high. The company confirmed its US ADR listing will raise up to KRW 45.5 trillion (around $33B) to fund HBM and AI chip capacity expansion. Direct read-across for memory pricing power: SKHX is the world’s largest HBM supplier, and a Micron quarter at 84.9% gross margin with five-year fixed-floor contracts tells investors the floor under HBM pricing is structural, not cyclical.

Russell 2000

Led the US tape at +1.29% in early Thursday trade, extending the rotation that survived Tuesday’s chip rout. Continuation above 3,000 keeps the small-cap-as-rotation-tell intact. Reference points for context, not entry or exit signals.

Index Levels to Watch

Nasdaq Composite around 25,540 after a modest pop on the open; resistance to clear is the 25,750 zone from Wednesday’s intraday high, with 26,000 the next significant reference. S&P 500 around 7,381 after opening higher; the 7,400-7,450 zone is the next test on a continuation, with 7,300 the immediate downside reference. Dow back above 52,000 on industrials and healthcare strength. Russell 2000 holding above 3,000 as the rotation line. Reference points for context, not entry or exit signals.

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