Micron: AI’s Undervalued Memory Powerhouse Up 145%

When investors think about artificial intelligence stocks, names like Nvidia (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing (NYSE:TSM), and Intel (NASDAQ:INTC) typically dominate the conversation. These companies rightfully claim the spotlight, delivering record revenues, market share gains, and innovations that fuel everything from chatbots to autonomous systems. However, beneath the hype, AI’s foundation relies on more than just processing power and fabrication prowess. Data storage and high-speed memory are the unsung necessities that enable seamless data flow, preventing critical bottlenecks in the AI pipeline.

Micron Technology (NASDAQ:MU), the leader in memory and storage solutions, has become indispensable to the AI boom despite receiving far less attention than its more famous counterparts. The company designs and produces dynamic random-access memory (DRAM) and NAND flash chips—components that store and shuttle vast datasets during AI operations. Without efficient memory, even the fastest GPUs from Nvidia would stall, as AI models require terabytes of data to train effectively. Nvidia CEO Jensen Huang recently acknowledged this critical relationship, stating that “Micron’s leadership in high-performance memory is invaluable to enabling the next generation of AI breakthroughs.”

Wall Street is finally awakening to Micron’s potential as analysts project the company will more than double its earnings this fiscal year to $16.68 per share, fueled by surging demand for AI data centers. Revenue is expected to climb 62% over the next two years as hyperscalers like Amazon (NASDAQ:AMZN) and Google ramp up their AI infrastructure investments. Over the next five years, earnings should grow at a 32% compound annual rate, outpacing many semiconductor peers.

What makes this growth story particularly compelling is the valuation disconnect. Despite gaining 145% year-to-date, MU stock trades at just 10 times forward earnings—a stark discount in a market where AI darlings command premiums north of 40x. Its price-to-earnings-to-growth (PEG) ratio sits at just 0.19, signaling the stock is deeply undervalued relative to its expansion trajectory. For context, that’s cheaper than the broader semiconductor index and a fraction of Nvidia’s elevated multiple, creating what many see as a rare opportunity for patient investors in an otherwise frothy sector.

Not all market voices are uniformly bullish on Micron’s immediate prospects. CNBC’s Jim Cramer recently advised viewers to hold off on purchasing shares, suggesting a pullback might offer a better entry point. “Wait for it to come down,” he said on a recent episode, citing short-term market jitters around memory pricing cycles and broader chip sector rotations. Cramer’s caution isn’t entirely baseless—memory markets have historically swung with supply gluts and demand dips, and 2025’s rally has left some wondering if valuations have overheated.

However, for long-term investors eyeing AI’s multi-decade expansion, this tactical caution may miss the bigger picture. Micron is no longer just a cyclical commodity player; it’s pivoting hard into AI-specific innovations like HBM3E, which boasts 20 times the bandwidth of previous generations. Strategic partnerships with Nvidia and Advanced Micro Devices (NASDAQ:AMD) underscore its critical role in next-generation AI systems, while capacity expansions in the United States and Asia position the company to capture rising orders from hyperscale customers.

With AI infrastructure spending projected to hit $230 billion annually by 2027 according to Gartner, Micron’s entrenched position in high-bandwidth memory could yield compounding returns for years to come. At current valuation levels, MU stock’s discounted forward P/E embeds ample margin for error even if growth moderates temporarily. Institutional investors have shown increased accumulation interest, and options flow indicates bullish bets on further upside, suggesting that smart money sees the long-term potential outweighing near-term volatility concerns.