Apple Says It Will Keep Paying More for Memory Chips After December. That's Good News for Micron Stock.
I'm LongbridgeAI. Here is the key information I extractedShares of memory chipmaker Micron Technology (MU +2.58%) dropped around 6% on Nov. 2. The slide came the same day shares of Japanese flash memory maker Kioxia Holdings (KXIAY +2.10%) sank around 16% in Tokyo.
Kioxia, which posted results on Oct. 30, expects its revenue to rise only about 1% sequentially in the December quarter. And this comes right after a 40% surge from the June quarter to the September quarter.
Then, after the market closed on Nov. 2, Apple (AAPL -1.90%) sent a very different message. On its earnings call, the iPhone maker said it expects the prices it pays for memory to keep rising into next year.
I think Apple's comment matters more for Micron, because most of what Micron sells isn't the type of chip Kioxia makes.
Image source: Micron.
Apple's memory warning
"[L] ooking beyond the December quarter, we see the pricing for memory purchases continuing to increase," Apple CEO John Ternus said on his first earnings call on the job. He called the memory pricing Apple sees now "unprecedented."
The cost is already showing up in Apple's results. Its gross margin was 47.9% in the September quarter (its fiscal fourth quarter), a figure that included around 1 percentage point of benefit from tariff refunds. For the December quarter, management guided for a gross margin of 45% to 46%. Putting the tariff benefit aside, chief financial officer Kevan Parekh said most of the expected sequential drop at the midpoint of the range comes from higher memory costs. Apple also expects memory to limit how many Macs and iPads it can supply in the quarter, because demand has been stronger than it thought.
Of course, Apple didn't name its memory suppliers on the call, so this isn't about any single contract. But when a tech company with about $479 billion in fiscal 2026 sales says memory prices will keep rising, it's a useful signal for the whole market.
Kioxia's outlook is mostly about flash
Kioxia makes flash memory (NAND, the chips that store data in phones, PCs, and data center drives), and its prices have been climbing more slowly. Its average selling price surged roughly 70% from the March quarter to the June quarter, then rose by a percentage in the mid-20s in the September quarter. For the December quarter, Kioxia expects flat shipments and just a moderate price increase.
However, Kioxia's own explanation points partly to currency, timing, and mix. Its guidance absorbs a hit of around ¥55 billion from a stronger yen. Some volume was sold early, in the September quarter, and more will slip into the March quarter as sales shift toward data center customers, whose orders take longer to fill. Chips for phones and other smart devices will also be a bigger share of the December quarter, which weighs on the average price. And Kioxia still expects supply shortages to last through 2027.
Micron, though, mostly sells DRAM (the short-term working memory that devices use as they run). During the three months ending Sept. 3 (Micron's fiscal fourth quarter of 2026), DRAM revenue reached a record $39.8 billion, up 343% from the year-ago quarter and equal to 73% of the company's total.
Flash was 26%, and even then, data center drives brought in over two-thirds of it.
Granted, Micron's price increases are slowing, too. Its DRAM prices climbed by a percentage in the low 60s in the fiscal third quarter, then by a high-teens percentage in the fiscal fourth quarter. Still, management expects revenue to grow sequentially in every quarter of fiscal 2027.
Micron stock looks cheap after the drop
The bigger risk to memory stocks is that these price increases keep shrinking until they end. And higher prices might eventually hit demand. Kioxia expects PC makers to buy less flash memory through 2027 since higher component costs weigh on PC sales.
But Apple's comment suggests at least one massive buyer expects to keep paying more after December.
MU - Micron Technology
NASDAQ · As of 4:00 PM ET 11/03/26
Moneyball Superscore94/100Key data points
Meanwhile, Micron stock trades near $860 as I write this, over 30% off its 52-week high of $1,255.
Management's guidance calls for about $38 of earnings per share in the fiscal first quarter on a non-GAAP (adjusted) basis, up from about $33 in fiscal Q4.
Four quarters at this rate would put the stock at under 6 times earnings. In other words, the stock price arguably assumes memory profits fall sharply, and soon.
Is Apple's warning good news for Micron stock, then? I think it is. At that valuation, I'd consider buying shares after Monday's drop.
Kioxia's outlook is still worth remembering, though, because the next sign of slowing prices might hit the stock just as hard.