Every so often, a company’s numbers stop making sense next to its soaring profits. Micron Technology (MU 5.68%) is having one of those moments. In its fiscal third quarter (the period ended May 28, 2026), the memory maker earned $24.67 per share on a generally accepted accounting principles (GAAP) basis. Its quarterly dividend, declared the same week, was $0.15 — the same $0.15 it declared last quarter. A company earning that much cannot keep paying that little forever.
Something has to give.
Image source: Getty Images.
A cash machine, for now
The quarter was a blowout in the truest sense. Revenue rose 346% year over year to a record $41.46 billion, and net income reached $28.24 billion, powered by demand for the high-bandwidth memory that goes into AI accelerators. Management guided for even more in the current quarter: about $50 billion in revenue.
To grasp the scale, Micron earned more in this single quarter than it did in some entire years of the last cycle. Revenue of $41.46 billion was up from $9.3 billion a year earlier, and that guide of $50 billion would be another 20% jump on top of it. High-bandwidth memory — the specialized chips stacked next to AI processors — is booked out well into next year, which is why the company can guide with such unusual confidence.
“Micron’s record fiscal Q3 financial results and even stronger outlook for Q4 reflect the strategic value of memory in the AI era,” said CEO Sanjay Mehrotra in the company’s earnings release.
And, unsurprisingly, the cash is piling up.
Micron generated $25.4 billion of operating cash flow and $18.3 billion of adjusted free cash flow in the quarter, ending with about $30.2 billion in cash and investments. Set the $0.15 quarterly dividend against $24.67 of quarterly earnings and the payout ratio is well under 1% — almost a rounding error.
Today’s Change
(-5.68%) $-58.69
Current Price
$973.59
Key Data Points
Market Cap
$1.1T
Day’s Range
$950.30 – $1064.56
52wk Range
$103.38 – $1255.00
Volume
1.7M
Avg Vol
51.3M
Gross Margin
72.60%
Dividend Yield
0.05%
Where the cash goes next
So where does all that money go?
Three doors are open: a much bigger dividend, share buybacks, or reinvestment in the business. History offers a warning on that last one. Memory is cyclical, and makers have a habit of plowing cash into new capacity at the peak, only to watch prices crash once it comes online. Micron is doing some of that already — capital expenditures were $7.1 billion in the quarter and rising as it builds cleanroom capacity for AI memory.
Management has been fairly explicit about the sequence. It says it expects to return 100% of its excess cash to shareholders over time, and plans to step up capital returns later this year.
So, what is its plan? Capacity first, bigger shareholder returns after. A boosted dividend and buybacks are the pressure valve that hasn’t been opened yet.
This order of priorities when it comes to how Micron plans to deploy its excess cash makes sense. Buy back a lot of stock at the top of a memory cycle, and you risk overpaying right before earnings roll over. Hike the dividend too aggressively, and you may have to defend it through the next downturn. Micron has been burned by both mistakes before, and its cautious approach here arguably reflects a management team that remembers exactly what the bottom of a memory cycle feels like.
For a dividend stock trading at about 22 times earnings, that gap between what Micron makes and what it pays is the clearest sign of how extreme this memory up cycle has become. I’d expect the payout and buybacks to climb meaningfully once those commitments free up.
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