Key Takeaways
- Artificial intelligence (AI) is expected to continue driving growth in the stock market in 2026, with massive infrastructure investments and favorable dynamics in the memory market.
- Micron Technology and Marvell Technology are two value plays in the AI sector, offering a mix of growth and value.
- Micron Technology is trading at 11 times forward earnings and 9 times sales, with projected revenue and earnings growth of 100% and 400%, respectively.
- Marvell Technology is trading at a forward earnings multiple of 23, with 51% revenue growth and 100% non-GAAP net income growth in the first nine months of fiscal 2026.
Introduction to AI Growth
Artificial intelligence (AI) has been a key growth driver for the stock market in the past three years, with huge investments in this technology by tech giants and start-ups leading to a massive increase in revenue and earnings for many companies. As Deutsche Bank notes, "AI will continue to remain a catalyst for the stock market in the new year, driven by the continuation of massive infrastructure investments." However, the prolific surge in AI stocks in recent years means that there are not many stocks offering a mix of growth and value available in this sector.
Micron Technology: A Value Pick
Micron Technology is a solid value pick in AI right now, trading at just 11 times forward earnings and 9 times sales, despite remarkable growth in its revenue and earnings. As the article notes, "Buying Micron stock at this valuation is a no-brainer, as the company is poised to witness a massive increase in its business going forward, due to the favorable dynamics in the memory market." Consensus estimates project Micron’s revenue to double in the current fiscal year to almost $74.5 billion, with a nearly fourfold increase in earnings to $32.42 per share in fiscal 2026.
Memory Market Dynamics
The memory market is expected to remain favorable for Micron, with Counterpoint Research predicting that the price of dynamic random access memory (DRAM) could increase by 40% to 50% in the current quarter, followed by a 20% jump in the next quarter. Moreover, memory prices are expected to remain inflated in 2027 and 2028 due to supply constraints, driven by the huge appetite for memory chips used in AI accelerators deployed in data centers. As the article notes, "The high-bandwidth memory (HBM) chips used in AI data center accelerators are consuming three times the DRAM capacity of PC memory."
Marvell Technology: Another Value Play
Marvell Technology is another company that’s growing at a healthy pace and can be bought at an attractive valuation. The company designs custom AI processors and networking chips, which are in hot demand from several hyperscalers and AI companies. As the article notes, "Marvell’s custom AI chip designs are also used by emerging hyperscalers." The company’s revenue in the first nine months of the ongoing fiscal 2026 increased by 51% from the same period last year to almost $6 billion, with non-GAAP net income more than doubling during this period to $2.05 per share.
Growth Prospects for Marvell
Marvell’s growth is likely to accelerate in the future, with the company securing an additional five design wins for its AI chips at a couple of U.S.-based hyperscalers and engaged in deep negotiations with a third one. The new design wins will ramp into volume production by next year, indicating that Marvell should be able to sustain its healthy growth levels. As the article notes, "The company could expand its opportunity in custom AI processors to more than 10 customers, with the potential to win over 50 chip designs." Analysts are forecasting the company’s growth rate to pick up, with its earnings potentially increasing at a faster pace than market expectations if it attracts more customers on board.
Conclusion
In conclusion, Micron Technology and Marvell Technology are two value plays in the AI sector that offer a mix of growth and value. With their strong growth prospects and attractive valuations, they are well-positioned to benefit from the continued growth of the AI market. As the article notes, "Like Micron, Marvell appears to be a top AI stock to buy in 2026 for investors seeking a value play within this rapidly growing sector, particularly given its potential to become a long-term winner based on the promising prospects of the custom AI processor market."
https://www.fool.com/investing/2026/01/15/this-artificial-intelligence-stock-is-a-terrific-b/