Key Takeaways
- Micron Technology and Marvell Technology are two AI infrastructure companies that offer a mix of growth and value in the AI sector.
- Micron Technology is trading at a cheap valuation despite its stunning growth, with a forward earnings multiple of 11 and a sales multiple of 9.
- Marvell Technology is witnessing healthy growth in revenue and earnings, with a forward earnings multiple of 23 and a sales multiple of 9.3.
- Both companies have solid prospects due to the growing demand for custom AI processors and memory chips.
- Analysts expect Micron’s revenue to double in the current fiscal year, while Marvell’s revenue has increased by 51% in the first nine months of the ongoing fiscal year.
Introduction to AI Infrastructure Companies
The artificial intelligence (AI) sector 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 Solid Value Pick
Micron Technology is a solid value pick in the AI sector, trading at just 11 times forward earnings and 9 times sales, despite the remarkable growth in its revenue and earnings. As the company’s CEO notes, "We are seeing a significant increase in demand for our memory products, driven by the growing adoption of AI and machine learning in various industries." Consensus estimates project Micron’s revenue to double in the current fiscal year to almost $74.5 billion, with the bottom-line growth expected to be significantly larger, with analysts anticipating a nearly fourfold increase in earnings to $32.42 per share in fiscal 2026.
Marvell Technology: A Growing Player in AI Infrastructure
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 Marvell’s CEO notes, "We are seeing a significant increase in demand for our custom AI chips, driven by the growing adoption of AI and machine learning in various industries." Marvell’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 its non-GAAP net income more than doubling during this period to $2.05 per share.
Growth Prospects and Valuation
Marvell’s forward earnings multiple of 23 makes it a no-brainer buy, as it is lower than the tech-focused Nasdaq-100 index’s forward earnings multiple of 26. Even the sales multiple of 9.3 is attractive, considering the remarkable top-line growth it has been delivering. The company has secured an additional five design wins for its AI chips at a couple of U.S.-based hyperscalers and is engaged in deep negotiations with a third one, indicating that Marvell should be able to sustain its healthy growth levels. As one analyst notes, "Marvell’s growth prospects are promising, driven by the growing demand for custom AI processors and memory chips."
Conclusion and Recommendation
In conclusion, Micron Technology and Marvell Technology are two AI infrastructure companies that offer a mix of growth and value in the AI sector. While Micron is trading at a cheap valuation despite its stunning growth, Marvell is witnessing healthy growth in revenue and earnings, with a forward earnings multiple of 23 and a sales multiple of 9.3. Both companies have solid prospects due to the growing demand for custom AI processors and memory chips, making them attractive investment opportunities for investors seeking a value play within this rapidly growing sector. As the Motley Fool notes, "The 10 stocks that made the cut could produce monster returns in the coming years," and investors should consider these companies as part of their investment portfolio.
https://www.nasdaq.com/articles/artificial-intelligence-stock-terrific-bargain-buy-2026-hint-its-not-micron