Tech Explained: Is Micron Technology the Cheapest AI Stock? in Simple Terms

The artificial intelligence (AI) revolution has sparked a new wave of high-performing investments, including Nvidia (NASDAQ:NVDA), which has become the face of the industry, while Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) has advanced its position in the space, leapfrogging over rivals with the release of Gemini 3 in November. Other companies, like Advanced Micro Devices (NASDAQ:AMD), have also benefited from rising demand for AI hardware. 

Yet there is one stock that stands out as perhaps the cheapest AI stock on the market with the best opportunity for hypergrowth: Micron Technology (NASDAQ:MU). Although its stock has risen over 250% in the past year, it still trades at valuations that suggest it is deeply discounted given its role in AI memory supply.

Micron’s Core Business and AI Role

Micron produces dynamic random access memory (DRAM) and NAND flash memory chips essential for data storage and processing. The company designs, manufactures, and sells these components worldwide, focusing on high-performance solutions for data centers, mobile devices, and automotive applications. Its high-bandwidth memory products support AI accelerators, enabling faster data handling in systems from Nvidia and others. 

This positions Micron to power the expansion of AI data centers, where memory demand is surging. The company’s high-bandwidth memory capacity is sold out through 2026, reflecting tight supply amid growing AI workloads. Industry forecasts indicate DRAM shortages will extend well beyond 2026, as AI applications consume more wafer capacity than traditional uses. 

Micron has more business than it can handle due to a lack of available clean room space — leaving it able to handle only 50% to 66% of its key customers’ medium-term bit demand. While more clean room capacity will begin to come online in 2027, demand is still expected to outstrip supply.

The memory maker holds about 21% market share in high-bandwidth memory, trailing SK Hynix but still benefiting from AI’s insatiable demand.

Sold-Out Inventory Signals Strength

Micron’s inventory constraints highlight its market leverage. High-bandwidth memory — critical for AI chips — requires three times the production area of standard memory, limiting output. Micron has confirmed its entire 2026 supply of high-bandwidth memory, including the upcoming HBM4 generation, is already allocated. This scarcity supports higher pricing and margins, with the company redirecting resources from consumer products to meet AI demand. It is targeting approximately 20% shipment growth in both DRAM and NAND this year.

The company is investing in new facilities and just broke ground on a megafab near Syracuse, N.Y., backed by over $6 billion in CHIPS Act funding, to boost future capacity.

Attractive Valuation Amid Growth

Micron trades at 34 times trailing earnings, under 10 times estimates, and goes for just a fraction of its long-term earnings growth rate. Analysts forecast earnings growing 70% annually over the next five years, driven by AI trends. 

For the second quarter of fiscal 2026, Micron is guiding for revenue to $18.7 billion, a 132% year-over-year increase, and adjusted earnings of $8.42 per share. Fiscal 2025 revenue was $37.4 billion. If revenue growth holds flat sequentially after the second quarter, annual revenue could approach $75 billion — double last year’s total — with adjusted earnings near $33.68 per share. Applying the 34X multiple, it yields a potential share price of $1,145, implying a threefold increase from current levels around $363. 

Consensus estimates forecast full-year fiscal 2026 earnings per share at $32.67 — which would yield an $1,110 stock price — with next-year estimates at $41.54 per share. 

Compared to peers, Micron’s forward price-to-earnings ratio of 9.6 is far lower than the sector average of 25x, reflecting its cyclical nature but underscoring undervaluation amid the memory supercycle.

Key Takeaway

Micron having zero sequential growth is highly unlikely, as AI market expansion shows no signs of slowing. Demand for high-bandwidth memory and related products remains constrained, supporting Micron’s outlook.

Now, having come so far, so fast, it is possible Micron could see its stock pullback. Yet, even if the market doesn’t recognize its full potential, Micron stands out as one of the most undervalued AI stocks available. The company’s strategic shift toward AI infrastructure, combined with sold-out capacity and robust guidance, positions it for continued strength and growth through 2026 and beyond.