As artificial intelligence reshapes the economics of computing, the market's gaze has fixed almost entirely on Nvidia — yet in the quieter corridors of the semiconductor world, Micron Technology is absorbing the same tidal forces at a fraction of the price. Memory chips, long considered a commodity, have become essential infrastructure for the AI era, and Micron's fiscal results suggest the market has not yet fully reckoned with what that means. For those who believe transformative moments are rarely captured by a single company alone, Micron's valuation — 19 times forward earnings against Nvi
Micron's AI Momentum Offers Cheaper Alternative to Pricey Nvidia
Memory chips carrying the weight of AI's expansion
Mark
So Micron just had a really strong quarter. What's actually driving that growth?
Mimi
It's the same AI wave that's lifted Nvidia, but Micron is positioned differently. They make memory chips—the DRAM and storage that goes into everything from data centers to phones. When you're training AI models or running them, you need a lot of memory bandwidth and capacity. Micron sold $100 million in high-bandwidth memory chips last quarter alone, and they're guiding for that to grow into the billions.
Luke
But wait—Nvidia is growing revenue faster this year. 97 percent versus Micron's 61 percent. So why would you buy Micron instead?
Mimi
Because the growth rates are expected to flip. Analysts are forecasting Micron to accelerate next year, potentially growing 50 percent, while Nvidia's growth is expected to moderate. And more importantly, Micron's earnings are projected to grow faster than Nvidia's over the next couple of years.
Mark
That's interesting. But how confident are we in those analyst forecasts? Memory markets can be cyclical.
Luke
That's a real question. The source material cites analyst projections, but it doesn't tell us how many analysts are making these calls or how much disagreement there might be. And yes, memory has historically been a cyclical business. The current AI tailwind is real, but whether it sustains at these growth rates is something the reporting doesn't fully explore.
Mimi
Fair point. But the structural demand is there. AI-enabled PCs are supposed to have 40 to 80 percent more memory than today's machines. Smartphones are carrying 50 to 100 percent more DRAM. That's not just a temporary spike—that's a shift in what these devices need.
Mark
And the valuation is the real hook here, right? Micron at 19 times forward earnings versus Nvidia at 48 times.
Mimi
Exactly. You're getting a company with faster projected earnings growth at a massive discount to the valuation multiple of the market leader.
Luke
But that discount exists for a reason. Nvidia has proven execution, market dominance, and a moat around GPU design. Micron is a commodity memory maker competing in a tougher market. The question isn't whether the numbers are right—it's whether the market is correctly pricing in the risk that Micron's growth doesn't materialize or that memory prices collapse if supply catches up to demand.
O Pulso
- Nvidia's near-tripling in stock price over the past year has left many investors searching for AI exposure that doesn't require paying 48 times forward earnings for the privilege.
- Micron's fiscal Q3 revenue surged 81% year over year to $6.8 billion, with a dramatic swing from a $1.43 per share loss to $0.62 in profit — signaling that the memory market's downturn has decisively reversed.
- High-bandwidth memory chips, critical to powering AI graphics cards, are expected to carry Micron's HBM revenue from hundreds of millions this year to multiple billions in fiscal 2025 — a trajectory that has yet to be fully reflected in the stock price.
- AI is quietly inflating memory demand across every device category — AI-enabled PCs requiring up to 80% more DRAM, smartphones carrying up to 100% more memory — expanding the total market well beyond data centers alone.
- Analysts project Micron's earnings will grow faster than Nvidia's over the next two fiscal years, yet the stock trades at less than half Nvidia's forward earnings multiple, leaving a valuation gap that investors are beginning to examine.
As artificial intelligence reshapes the economics of computing, the market's gaze has fixed almost entirely on Nvidia — yet in the quieter corridors of the semiconductor world, Micron Technology is absorbing the same tidal forces at a fraction of the price. Memory chips, long considered a commodity, have become essential infrastructure for the AI era, and Micron's fiscal results suggest the market has not yet fully reckoned with what that means. For those who believe transformative moments are rarely captured by a single company alone, Micron's valuation — 19 times forward earnings against Nvidia's 48 — poses a question worth sitting with.
Nvidia's graphics processors have become synonymous with the AI boom, and the market has priced them accordingly — the stock trades at 72 times trailing earnings after nearly tripling in a year. But a quieter beneficiary of the same wave is trading at a fraction of that valuation, and its most recent results suggest the gap may not be justified for long.
Micron Technology, a specialist in memory chips, reported fiscal third-quarter revenue of $6.8 billion — an 81 percent jump from the prior year — alongside a dramatic earnings reversal, swinging from a loss of $1.43 per share to a profit of $0.62. Its forward guidance is equally striking: $7.6 billion in projected revenue for the current quarter, a 90 percent year-over-year increase, with earnings of $1.08 per share reversing a loss of the same magnitude a year earlier.
The engine behind this growth is AI's insatiable appetite for memory. In data centers, Micron's high-bandwidth memory chips — essential components in AI accelerators — generated $100 million in sales last quarter alone, with the company expecting that figure to scale into the billions by fiscal 2025. Its solid-state drive business is also expanding alongside a data center SSD market projected to reach $133 billion by 2032.
The opportunity extends well beyond data centers. AI-enabled personal computers are expected to require 40 to 80 percent more DRAM than today's average machine, while AI smartphones this year already carry 50 to 100 percent more memory than last year's flagship models. The global memory chip market itself is forecast to grow from $193 billion to $321 billion by 2030 — a secular expansion, not a cyclical blip.
Nvidia is expected to grow faster in the current fiscal year, with revenue projected to nearly double. But analysts forecast Micron's earnings will outpace Nvidia's growth over the following two years — and Micron trades at just 19 times forward earnings compared to Nvidia's 48. For investors seeking meaningful AI exposure without paying a premium that already assumes perfection, Micron offers a different kind of entry point — one where the story, by most measures, has not yet been fully told.
Nvidia's dominance in artificial intelligence has made the company one of the market's most expensive stocks. Its graphics processors power the data centers training the large language models behind ChatGPT and similar systems, and investors have bid the stock up nearly threefold over the past year. The company now trades at 72 times trailing earnings—a price that reflects both its pioneering role and the market's hunger for exposure to AI.
But there is another semiconductor maker riding the same wave of AI adoption, and it is trading at a fraction of Nvidia's valuation. Micron Technology, a memory chip specialist, reported its fiscal third-quarter results on June 26, and the numbers suggest the company is capturing significant demand from the same AI boom that has enriched Nvidia.
Micron's fiscal Q3 revenue jumped 81 percent year over year to $6.8 billion. More striking was the earnings turnaround: the company posted non-GAAP net income of $0.62 per share, compared to a loss of $1.43 per share in the same quarter a year earlier. The company's forward guidance points to acceleration. For the current quarter, Micron is projecting $7.6 billion in revenue at the midpoint of its range—a 90 percent increase from the year-ago period—and earnings of $1.08 per share, reversing a loss of $1.07 per share from the prior year.
The growth is being fueled by demand across multiple markets, all of which are being reshaped by AI. In data centers, Micron sold $100 million worth of high-bandwidth memory chips last quarter. These HBM chips are essential components in AI graphics cards, providing the bandwidth and computing power needed to process massive amounts of data. The company expects HBM revenue to expand from several hundred million dollars in the current fiscal year to multiple billions in fiscal 2025. Beyond HBM, Micron's data center storage business is also benefiting from increased demand for solid-state drives used in AI training and inference workloads. The global data center SSD market is projected to reach $133 billion in revenue by 2032, up from $37 billion last year.
AI is also reshaping the consumer device market in ways that benefit memory makers. Micron management noted on its earnings call that AI-enabled personal computers are expected to contain 40 to 80 percent more DRAM than today's average machine, and they will likely come with larger storage capacities as well. In smartphones, the shift is even more pronounced: AI-enabled phones this year are carrying 50 to 100 percent more DRAM compared to last year's flagship models. These changes point to a broader expansion of the memory market itself. The global memory chip market is forecast to grow to $321 billion in revenue by 2030, up from $193 billion last year.
When it comes to growth rates, the comparison between Micron and Nvidia becomes interesting. Nvidia is expected to grow faster this year, with revenue projected to jump from $60.9 billion to $120 billion—a 97 percent increase. Micron's current-year growth is more modest: revenue is expected to rise from $15.5 billion to $25 billion, a 61 percent increase. But analysts are forecasting that Micron will accelerate in the following year, with revenue potentially jumping another 50 percent. Over the next couple of fiscal years, Micron's earnings are expected to grow at a faster pace than Nvidia's.
The valuation gap is the crucial difference. Micron is trading at 19 times forward earnings, while Nvidia trades at 48 times forward earnings. That discount reflects both the market's preference for Nvidia's established dominance and perhaps some skepticism about whether Micron can sustain its growth trajectory. But for investors looking for exposure to the AI boom at a lower entry price, with a company that analysts expect to grow earnings faster than Nvidia in the near term, Micron presents a different kind of opportunity—one where the growth story may not yet be fully priced into the stock.
Citações Notáveis
AI-enabled PCs are expected to have 40% to 80% more DRAM content than today's average PC, and likely equipped with bigger storage capacities.— Micron management, earnings conference call
HBM revenue expected to increase from several hundred million dollars in the current fiscal year to multiple billions of dollars in fiscal 2025.— Micron guidance
Quer a matéria completa?
Leia o original em Yahoo Finance ↗
Economy & Finance