Micron's 88/100 score is supported by a strong FY2025 recovery in revenue and profitability, solid liquidity and controlled shareholder costs. The weakest combination is that only $1.67 billion of free cash remained after fab investment despite high net income.
What does Micron do?
Micron develops and manufactures memory and storage products. DRAM provides fast working memory, while NAND retains data without power. HBM serves the high-bandwidth needs of AI accelerators in datacentres. Revenue moves with bit shipments, average selling prices, product mix and manufacturing cost.
The sector has structural growth opportunities, but prices and margins can fall rapidly when supply and demand diverge. A strong quarter should therefore not be treated as a permanent normal; revenue, gross margin, inventory and capital expenditure need to be read together.
What do the FY2025 financials show?
Revenue increased 49% to $37.38 billion. DRAM revenue was $28.58 billion and NAND revenue $8.50 billion. Gross profit was $14.87 billion with a 39.8% margin; operating income was $9.77 billion with a 26.1% margin. Net income reached $8.54 billion.
Operations generated $17.53 billion of cash, while property and equipment expenditure was $15.86 billion. The approximately $1.67 billion difference equals only 4.5% of revenue and 19.5% of net income, making semiconductor manufacturing's capital intensity visible.
Why do the five categories produce this result?
Growth 61/100: Five-year compound revenue growth was 7.8% and net-income growth 9.9%. Revenue increased in 80% of measured years. The FY2025 jump was strong, but down years in the memory cycle limit consistency.
Profitability 78/100: The 39.8% gross and 26.1% operating margins are positive. Approximate ROIC of 16.2% indicates a positive return on capital, though the scale of fab and technology investment keeps capital efficiency below the top tier.
Cash flow 37/100: Operating cash flow of $17.53 billion is strong, but $15.86 billion of investment narrows free cash. Dividends and repurchases equal about 31% of free cash flow; the central question is how much profit remains as cash after investment.
Balance sheet 100/100: Current assets were $28.84 billion, current liabilities $11.45 billion, and cash plus marketable investments $11.94 billion. The current ratio was 2.52 and operating profit covered interest expense 25.2 times. The composite category result is capped at 100 for readability.
Shareholder policy 97/100: Five-year share-count change was about 0.1% annually and stock compensation was 2.6% of revenue. Micron paid $522 million of dividends and made no programme repurchases in FY2025. The model's approximate valuation measure uses SEC public-float data, not the live share price.
Critical combinations
- Revenue growth + rising gross margin
- High operating profit + strong interest coverage
- Controlled share count + cash-supported dividend
- High net income + low cash conversion
- AI demand + accelerating capacity investment
- Cyclical pricing + large fixed-cost base
Q3 FY2026 current context
Micron reported $41.46 billion of Q3 FY2026 revenue, an 84.6% GAAP gross margin, an 80.4% operating margin and $28.24 billion of net income. Operating cash flow was $25.39 billion, net capital expenditure $7.1 billion and company-reported adjusted free cash flow $18.3 billion.
Cloud Memory produced $13.77 billion, Core Data Center $11.52 billion, Mobile and Client $11.52 billion, and Automotive and Embedded $4.63 billion of revenue. The results demonstrate strong AI and datacentre demand, but are not mixed into the FY2025 score and do not assume that current prices or margins will persist.
Micron's financial profile shows a strong recovery. The long-term test is not AI demand alone, but whether demand aligns sustainably with capacity investment, pricing and free cash flow. This is not investment advice.
Frequently asked questions
Why is Micron's cash-flow score low?
Operating cash flow was high in FY2025, but fab and equipment investment absorbed most of it; free cash equalled only 19.5% of net income.
Are Q3 FY2026 results included in the 88 score?
No. The score uses FY2025 10-K data; Q3 FY2026 is separately labelled current context.
Where the figures come from
- Micron FY 2025 Form 10-K, SEC — fiscal year ended 28 August 2025; primary source for the score.
- Micron Q3 FY 2026 Form 10-Q, SEC — interim period ended 28 May 2026.
- Micron Q3 FY 2026 results — current business and product-mix context; not included in the FY2025 score.
- Free cash flow is operating cash flow less property and equipment expenditure. Category results divide measure points by each group's maximum and are capped at 100.