From Chips to Data Centers, AI Investors See the Next Breakout in This Stock

Micron is a number one maker of laptop reminiscence merchandise which can be very important to the environment friendly operation of AI information heart servers.
Its income, internet revenue, and free money circulation are rising at unbelievable charges on account of a scarcity in laptop reminiscence.
It trades at a low P/E ratio relative to different AI {hardware} shares.
10 shares we like higher than Micron Expertise ›

Fears abound that the market is in a synthetic intelligence (AI) bubble. However regardless of what the speaking heads are saying, a full 90% of respondents surveyed for The Motley Idiot’s 2026 AI Investor Outlook Report who recognized themselves as AI traders mentioned they both plan to carry or develop their positions in AI shares this yr.

That paints a rosy image of retail traders’ views of the trade, besides, it is clear that a number of AI shares have grow to be costly relative to their earnings. Nevertheless, for traders who’re in search of new alternatives to purchase now, there’s one firm that sits on the nexus of the AI infrastructure buildout that is buying and selling at an absolute discount stage: Micron Expertise (NASDAQ: MU).

Micron designs and produces reminiscence {hardware} for all sorts of laptop techniques — together with information heart servers.

What’s essential to acknowledge right here is that AI techniques function by processing huge quantities of knowledge. And whether or not these servers are getting their processing energy from clusters of GPUs from Nvidia or Superior Micro Gadgets, or from application-specific built-in chips (ASICs) from Broadcom and its hyperscaler shoppers, all of them nonetheless want fast entry to that information — which implies it have to be saved on chips like these Micron produces.

In keeping with information from TrendForce, the present stage of demand for random entry reminiscence (RAM) chips exceeds provide by 10%. And talking to NPR, a senior TrendForce analysis exec mentioned final month that costs for dynamic random entry reminiscence (DRAM) — the most typical sort of RAM — are 50% increased than they have been 1 / 4 in the past. Furthermore, she expects costs to rise by one other 40% in the course of the present quarter and keep elevated for the foreseeable future.

Picture supply: Getty Pictures.

Micron produces the DRAM, RAM, and information heart reminiscence {hardware} that AI packages want. Specifically, Micron has a portfolio of excessive bandwidth reminiscence (HBM) merchandise that function excessive efficiency and energy effectivity. The surging demand for reminiscence to assist AI servers, mixed with Micron’s bevy of high-quality merchandise, has created an ideal storm, accelerating the corporate’s progress.

In its fiscal 2026 first quarter, which ended Nov. 27, Micron’s income rose 56% yr over yr to $13.6 billion. Web revenue noticed much more spectacular progress, surging 178% from $1.87 billion within the prior-year interval to $5.2 billion, whereas working money circulation rose by 159.5% yr over yr to $8.41 billion. Over the previous 4 reported quarters, it has achieved a internet revenue margin of 28.2%. Lastly, the corporate’s money reserves stand at $9.7 billion — funds it could use to develop its operation.

And it does plan to develop. On Dec. 3, Micron introduced it was exiting from the patron reminiscence market to deal with its manufacturing of AI {hardware}.

Regardless of all that excellent news, Micron solely trades at a ahead price-to-earnings ratio (P/E) of 11. That is an absolute discount in comparison with fellow AI {hardware} producers like Superior Micro Gadgets, which has a ahead P/E of 85.7, Taiwan Semiconductor Manufacturing, which trades at a ratio of 31, or Nvidia, with a ahead P/E ratio of 40.7.

In sum, Micron is without doubt one of the greatest worth performs in AI {hardware} proper now. Although the inventory is up by 247% over the past yr — 15 instances the S&P 500‘s return — primarily based on its worth and progress figures, it has loads of runway left.

A rosy outlook for AI shares, certainly.

Before you purchase inventory in Micron Expertise, contemplate this:

The Motley Idiot Inventory Advisor analyst group simply recognized what they imagine are the 10 greatest shares for traders to purchase now… and Micron Expertise wasn’t certainly one of them. The ten shares that made the lower might produce monster returns within the coming years.

Think about when Netflix made this listing on December 17, 2004… in the event you invested $1,000 on the time of our suggestion, you’d have $488,222!* Or when Nvidia made this listing on April 15, 2005… in the event you invested $1,000 on the time of our suggestion, you’d have $1,134,333!*

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*Inventory Advisor returns as of January 9, 2026.

James Hires has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Superior Micro Gadgets, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Idiot recommends Broadcom. The Motley Idiot has a disclosure coverage.

From Chips to Knowledge Facilities, AI Buyers See the Subsequent Breakout in This Inventory was initially printed by The Motley Idiot

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