Three days ago on this page, we told you to ignore the EPS number.
We told you to watch two things instead. The FY2027 guidance. And the Strategic Customer Agreement count.
Last night, Micron answered both questions. And the answers were so far above what anyone expected that the numbers almost look like a typo.
Let’s go through exactly what we said and exactly what happened.
What We Said On Monday
We told you the EPS and revenue beat was “almost certainly” going to happen. That was the easy call. The question we flagged was whether management would tell you the growth had legs beyond this quarter, or whether the guidance would reveal that the best of the cycle was already in the rearview mirror.
We also told you to watch the SCA count. At the March earnings call, Micron announced its first-ever Strategic Customer Agreement with a large customer. At the JPMorgan conference in May, management said they had made “meaningful progress” on more SCAs but wouldn’t give a number. We said Wednesday’s call would answer that.
Wednesday answered it.
The Numbers First
Revenue: $41.46 billion. Wall Street expected $35.59 billion. That is not a beat. That is a different level of business than anyone had modeled.
EPS: $25.11 adjusted. The consensus was $20.60. The high-end analyst estimate was $24.08. Micron beat the most optimistic professional estimate on the street.
Q4 revenue guidance: $50 billion, plus or minus $1 billion. Analysts expected $42.9 billion. Micron guided 16% above the consensus for next quarter. On a revenue base that is already breaking records by double-digit percentages every three months.
Q4 gross margin: 86%. We told you on Monday that hitting 81% gross margins in Q3 would be “among the highest gross margins ever recorded for a semiconductor company of this size.” They guided 86% for the next quarter. They did not just hit a historic level. They guided through it.
The SCA Revelation
This is the part of the call that changes how you should think about this business permanently.
Micron has signed 16 Strategic Customer Agreements. Collectively, these agreements cover roughly 40% of the company’s DRAM bits and about a third of NAND bits. Management’s target is to eventually cover roughly half of total company revenue under these agreements.
The structure of these agreements is unlike anything in the history of the memory industry. There is no cancellation provision. Customers cannot walk away. These are take-or-pay agreements. If a customer does not buy the volume they committed to, they still pay for it.
And customers have put their money where their mouths are. The 16 agreements collectively carry $22 billion in customer cash deposits, of which approximately $18 billion is actual cash already received. Upfront. Sitting on Micron’s balance sheet right now.
The CFO was asked about capital return. He said 100% of free cash flow would go to shareholders. Next quarter alone, free cash flow is expected to be approximately $30 billion. Think about what that means for buybacks.
The Thing Nobody Expected
We laid out two things to watch. Here is the one the call revealed that we did not predict.
The HBM total addressable market was previously expected to cross $100 billion in calendar year 2028. On last night’s call, Micron’s CFO said they now see the HBM TAM easily crossing $100 billion in 2027. A full year earlier than the prior forecast.
One year of pulled-forward demand in a market where supply cannot keep up for the foreseeable future. That is not a minor revision to a model. That is a structural shift in how fast the AI memory cycle is moving.
Also from the call: customers are not just asking for HBM in 2027. They are asking for volume commitments extending into 2028. And even at those extended horizons, “demand continues to be well above our supply across all the different HBM flavors.”
For some customers, Micron’s supply numbers are “a fraction of what they want.” That is a direct quote from the Chief Business Officer on an earnings call with the entire buy-side listening.
What This Means For The I-Told-You-So Part
On Monday, we said: “The number of signed SCAs tells you more about the durability of this business than any quarterly figure. A 5-year supply contract at locked-in pricing means Micron knows exactly what it will ship and at what margin for the next half decade. That is not a cyclical business. That is something structurally different from every prior memory upcycle.”
Last night, Micron confirmed 16 of them. Take-or-pay. Cannot be canceled. $22 billion in customer deposits already received. HBM TAM pulling forward by a year.
The Micron bear case rested on the argument that this is a normal memory cycle and prices would eventually collapse. The SCA structure, as now disclosed, makes that argument structurally harder to sustain. Customers have signed 5-year commitments with price floors. They have put $18 billion in cash on deposit. The bear case requires believing that these hyperscalers, who just handed Micron $18 billion in upfront cash, are going to walk away from an agreement that explicitly does not allow them to walk away.
What This Means For The LENS Index
The LENS Index has been tracking an AI memory position since early June. Through the KOSPI crash on June 23. Through the 13% single-day selloff in pre-earnings trading. Through every analyst note that questioned whether the valuation was sustainable.
The table below will tell you exactly where that position stands this morning after last night’s results, what the current return looks like, and what the thesis break conditions are for every holding in the portfolio. Whether this position is still open, at what allocation, and how it fits into the current portfolio is in the data right below.
| Metric | Value | Notes | Last Updated |
|---|---|---|---|
| Active Positions | 6 / 30 | Core/Base/Speculative | PODD on Watch List | 24-Jun-26 |
| Cash Deployed | 31% | Full positions visible to subscribers only | 24-Jun-26 |
| Cash Reserve | 69% | Minimum 15% cash reserve | 24-Jun-26 |
| Performance Since Launch | +4.3% | Cumulative method | S&P: -1.0% | 24-Jun-26 |
| Alpha Generated | +5.3% | Corrected (MRVL+DELL fixes applied) | 24-Jun-26 |
| Portfolio Beta | 0.68 | vs S&P 500 | 22 daily obs | 24-Jun-26 |
| Max Drawdown | -2.5% | Jun1 peak to Jun5 trough | 24-Jun-26 |
| Sharpe Ratio (Prelim.) | 2.71 | Annualized, 22 obs, rf=3.5% | 24-Jun-26 |
| Inception Date | May 22, 2026 | DELL pre-mortem | Warsh sworn in | Fixed |
| Benchmark | S&P 500 Total Return | Outperform on risk-adjusted basis | Fixed |
| Strategy | Narrative Disruption | Long-only, large-cap, max 30 positions | Fixed |
| Direction | Long Only | Subscribe to access all positions | Fixed |
Three days ago we told you to watch the SCAs and the guidance. The guidance came in 16% above consensus. The SCAs came in with 16 agreements, $22 billion in deposits, and a take-or-pay structure that removes the biggest word in the memory bear case.
That word is “if.”
Disclaimer: We do not hold any positions in the above stock(s). Read our full disclaimer here.
