Buy Nvidia, AMD Supplier Micron Stock Down 20% for AI Growth

Micron Technology, Inc. MU stock has soared 90% since early April and 45% in 2025, retaking critical technical levels in the process.Despite the rally, the semiconductor stock trades 20% below its June 2024 highs because its earnings outlook faded within the historically cyclical memory segment. Now looks like a wonderful opportunity to buy Micron for long-term artificial intelligence upside before its Q3 FY25 release on June 25.Micron is a compelling long-term AI investment because it is a leader in high-bandwidth memory chips that are critical for AI workloads. MU works directly with AI chip powerhouse Nvidia and its closest rival, AMD.Micron’s earnings and revenue growth outlook is staggering in FY25 and FY26. It also trades at a huge discount to Tech, though its stock has outpaced the sector for the last 20 years. The Bull Case for Micron Stock and Its AI GrowthMicron makes DRAM and NAND memory and storage chips that are critical components within devices from smartphones to AI data centers. Its growth and innovations in a key segment of the semiconductor industry helped MU stock climb roughly 1,100% in the past 20 years to crush the Zacks Tech sector’s 770%.The company works closely with Nvidia, and it is expanding its manufacturing footprint in the U.S. as part of the larger reshoring boom. Micron is a vertically integrated semiconductor company. This means it designs, manufactures, and tests most of its chips in-house, unlike fabless companies such as Nvidia that outsource manufacturing to foundries like TSMC.Speaking of, Micron announced on June 12 that it is expanding its U.S. investments to $200 billion, including $150 billion for memory chip manufacturing and $50 billion for R&D, to boost domestic semiconductor production. Micron, boosted by help from the U.S. government, aims to produce 40% of its DRAM in the U.S. On top of that, the “co-location of these two Idaho fabs with Micron’s Idaho R&D operations will drive economies of scale and faster time to market for leading-edge products.”Image Source: Zacks Investment ResearchMU’s memory segment has been one of the most boom-and-bust parts of the historically cyclical semiconductor industry. Micron’s revenue has fluctuated alongside consumer spending and production cycles across smartphones, PCs, laptops, vehicles, and more.The rise of data centers and, most recently, artificial intelligence, could see Micron become a bit more decoupled from those business cycles.The company’s advanced high-bandwidth memory (HBM) technologies are critical to AI because they provide the high bandwidth and large memory capacity needed to quickly move massive data sets for training and running complex AI models. Micron’s HBMs are energy-efficient, with a stacked design that reduces latency and power consumption, enabling faster and more efficient AI computations in data centers.Image Source: Zacks Investment ResearchMicron has predicted AI will drive record memory chip demand. MU is also a key supplier of memory chips for Nvidia’s NVDA industry-leading AI processors. The company works with the second biggest player in the AI chip space, AMD AMD as well. It announced on June 12 that its HBM has been designed into a “leading AMD AI platform.”MU said its “data center DRAM revenue reached a new record” in Q2 FY25, with HBM sales up more than 50% sequentially to over $1 billion for the first time. Management confirmed that HBM chip shipments are on track to ramp significantly in the second half of 2025, positioning Micron as a key beneficiary of surging AI-related infrastructure spending.MU’s Big AI-Boosted Growth OutlookMU is projected to grow its revenue by 41% in FY25 and 31% in FY26 to hit $46 billion, adding $20 billion to the top line between its FY24 and FY26. The run would see it break out firmly above its previous all-time highs of roughly $30 billion, which it hit in FY18 and FY22.Image Source: Zacks Investment ResearchMicron’s adjusted earnings are expected to skyrocket by 433% in FY25 and another 56% next year, from $1.30 in FY24 to $10.80 in FY26. Booming demand for its AI-focused HBM chips is helping drive its massive EPS growth.MU’s EPS outlook remains below where it was a year ago. But its FY25 consensus estimate is up slightly since its last earnings release, and Micron has beaten EPS estimates in 18 out of the past 20 quarters.Buy MU Stock Down 20% for Long-Term AI Growth and ValueMU stock has climbed roughly 1,100% in the past 20 years to crush the Zacks Tech sector’s 770%, and it's almost doubled Tech in the last 15 years. The chip memory chip maker’s outperformance continued in the past five years as well, with it up 141% vs. Tech’s 115%.Image Source: Zacks Investment ResearchYet, Micron is down 20% from its late June 2024 peaks while Tech floats right near its records. MU is still trading well below its all-time highs, even though the stock has soared 90% since early April and 45% in 2025, blowing away Nvidia and AMD.MU rallied after it found support at its pre-COVID, early 2020 highs (and its 2018 heights) and its long-term 50-month moving average. The stock is currently attempting to break above its gap lower from last July.Image Source: Zacks Investment ResearchOn the valuation front, Micron trades at a 50% discount to Tech and near its 10-year median at 12.5X forward earnings. Factoring in its stellar earnings growth outlook via its PEG ratio, MU trades at 0.2 vs. Tech’s 1.7.Micron also pays dividends, and its balance sheet is robust. All in, it might be time to buy the memory chip stock for long-term AI growth and beyond. 5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report Micron Technology, Inc. (MU): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks