Key Takeaways
- Chip stocks, such as Micron Technology, are expected to benefit from the growing demand for generative AI.
- Rising AI workloads are fueling demand for memory and storage solutions, which is a key area of focus for Micron Technology.
- Micron Technology’s valuation setup looks interesting, with a forward price-to-earnings ratio of 10.6 and expected earnings growth of threefold to fourfold over the next two fiscal years.
- The company’s share price could potentially reach $650 if its forward P/E were to double to roughly 20.
- Micron Technology is considered a highly compelling buy-and-hold opportunity for investors with a long-term horizon.
Introduction to the AI Chip Landscape
The rise of artificial intelligence (AI) has ushered in a generational growth wave for companies in the technology arena, particularly in the semiconductor industry. As stated in the article, "the king of the chip realm — Nvidia (NASDAQ: NVDA), which has seen its stock price rise by nearly 1,000% in just three years, propelling it to the most valuable company in the world." However, rising competition in the graphics processing unit (GPU) industry and the proliferation of custom application-specific integrated circuits (ASICs) from cloud hyperscalers Amazon, Microsoft, and Alphabet are slowly changing the narrative around Nvidia. As the article notes, "the hyperscalers are doubling down on AI capex because workloads are becoming both larger and more complex."
The Emergence of Micron Technology
Micron Technology (NASDAQ: MU) is expected to emerge as a new favorite among growth investors this year. The company specializes in high-bandwidth memory chips, which is a critical component in the AI chip landscape. As the article states, "the explosion of AI workloads is going to increasingly require more investment in high-bandwidth memory (HBM) as well as dynamic random access memory (DRAM) and NAND solutions to keep GPUs fully operational." This makes Micron Technology well-positioned to benefit from the growing demand for AI infrastructure.
Tailwinds for Micron’s Business
The hyperscalers, including Amazon, Microsoft, and Alphabet, are expected to spend nearly half-a-trillion dollars on AI infrastructure in 2026, according to research from Goldman Sachs. This is expected to fuel demand for chip procurement from companies like Nvidia and AMD. However, as the article notes, "the hidden bottleneck is at the data movement layer: memory and storage systems." This is where Micron Technology comes in, as the company’s high-bandwidth memory chips are critical for supporting the growing demand for AI workloads.
Valuation Setup
Micron Technology’s valuation setup looks interesting, with a forward price-to-earnings ratio of 10.6. The company’s earnings per share (EPS) are expected to rise between threefold and fourfold over the next two fiscal years, according to Wall Street’s consensus estimates. As the article states, "if the company is able to execute on its growth roadmap, I think there is a high chance that Micron could be set up for meaningful valuation expansion." If the company’s forward P/E were to double to roughly 20, its share price could potentially reach $650.
Growth Opportunity
Micron Technology is considered a highly compelling buy-and-hold opportunity for investors with a long-term horizon. The company’s critical role in the AI chip landscape, combined with its attractive valuation setup, makes it an attractive investment opportunity. As the article notes, "I think Micron stock is dirt cheap right now and makes for a highly compelling buy-and-hold opportunity for investors with a long-term horizon." With the growing demand for AI infrastructure and the company’s expected earnings growth, Micron Technology is well-positioned for long-term success.
Conclusion
In conclusion, Micron Technology is expected to emerge as a new favorite among growth investors this year, driven by the growing demand for generative AI and the company’s critical role in the AI chip landscape. With its attractive valuation setup and expected earnings growth, Micron Technology is considered a highly compelling buy-and-hold opportunity for investors with a long-term horizon. As the article states, "Micron is on the precipice of its own ‘Nvidia’ moment." With the right investment strategy, investors can potentially benefit from the company’s expected growth and success in the AI chip landscape.
https://www.nasdaq.com/articles/prediction-artificial-intelligence-ai-chip-stock-will-outperform-nvidia-2026-hint-its-not