MU vs. FORM: Which Semiconductor Stock Has More Potential Right Now?

Micron Technology MU and FormFactor FORM are both important players in the semiconductor ecosystem. Micron is a global leader in memory and storage solutions, while FormFactor provides advanced test and measurement technologies essential for chip manufacturing. These companies are positioned to benefit from surging demand in artificial intelligence (AI), advanced packaging and high-performance computing.

However, their financial performance, growth strategies and valuations offer different risk-reward profiles for investors considering semiconductor exposure. Let’s see which stock has an edge over the other from an investment perspective.

Micron Technology: Riding on AI Memory Wave

Micron sits at the heart of several transformative tech trends. Its exposure to AI, high-performance data centers, autonomous vehicles and industrial IoT uniquely positions the company for sustainable long-term growth. As AI adoption accelerates, the demand for advanced memory solutions like DRAM and NAND is soaring. Micron’s investments in next-gen DRAM and 3D NAND ensure it remains competitive in delivering the performance needed for modern computing.

The company’s diversification strategy is also bearing fruit. Micron has created a more stable revenue base by shifting its focus away from the more volatile consumer electronics market and toward resilient verticals such as automotive and enterprise IT. This balance enhances its ability to weather cyclical downturns. In the third quarter of fiscal 2025, its revenues and non-GAAP EPS soared 37% and 208%, respectively, year over year.

Micron Technology, Inc. Price, Consensus and EPS Surprise

Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote

Micron is also riding on a strong wave of high-bandwidth memory (HBM) demand. Its HBM3E products are attracting significant interest due to their superior energy efficiency and bandwidth, which are ideal for AI workloads.

In January 2025, NVIDIA confirmed that Micron is a core HBM supplier for its GeForce RTX 50 Blackwell GPUs, signaling deep integration in the AI supply chain. Additionally, its newly announced HBM advanced packaging facility in Singapore, set to launch in 2026 with expansion in 2027, underscores the company’s commitment to scaling production for AI-driven markets.

The continuously evolving new tech trends and diversification strategy are likely to aid Micron’s growth over the long run. The Zacks Consensus Estimate for fiscal 2025 and 2026 revenues indicates year-over-year growth of 45.7% and 32%, respectively. The consensus mark for EPS suggests a robust year-over-year improvement of 497.7% for fiscal 2025 and 57.9% for fiscal 2026.

FormFactor: Advanced Packaging Leader With Margin Challenges

Growing demand for advanced packaging, which improves product-level performance, power and density, is benefiting FormFactor’s prospects. Advanced packaging applications like HBM produce both higher test intensity, which expands the number of probe cards required per good die out and higher test complexity, which raises the performance requirements for each probe card.

FormFactor's unique capabilities position it for accelerated growth in the advanced probe card market. FORM expects the Advanced Probe Card market to grow to $2.7 billion by 2028, driven by innovation in products like SmartMatrix, Kepler and Pyramid RF probe cards, which meet the increasing demands of advanced technologies like 5G. The company’s broad product portfolio and diverse customer base contribute to this growth projection.

FormFactor’s latest financial results for the second quarter of 2025 demonstrate a potential for recovery as it capitalizes on semiconductor industry trends. In the second quarter of 2025, it registered a sequential increase in revenues and non-GAAP EPS of 14.3% and 17.4%, respectively.

FormFactor, Inc. Price, Consensus and EPS Surprise

FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote

Strength came from DRAM probe cards, particularly HBM products, where the company now ships to all three major HBM manufacturers — Samsung, Micron and SK Hynix. It is also gaining traction in foundry and logic probe cards for GPUs and AI-custom ASICs, while its Systems segment is benefiting from co-packaged optics and early quantum computing adoption.

Despite these technology wins, profitability remains a concern. The non-GAAP gross margin slipped 70 basis points sequentially to 38.5% in the second quarter, pressured by a lower-margin DRAM mix, higher operational costs and tariffs. Management is targeting a 40% non-GAAP gross margin on $200 million in third-quarter revenues but admits the near-term path is unclear. It predicts that tariffs imposed on imported goods to the United States would negatively impact its third-quarter 2025 non-GAAP gross margin by 100-150 basis points.

The Zacks Consensus Estimate for 2025 and 2026 revenues indicates year-over-year growth of 0.5% and 8%, respectively. The consensus mark for EPS suggests a year-over-year decline of 7.8% for 2025, while an increase of 29.1% for 2026.

MU vs. FORM: Valuation and Stock Performance

Micron trades at a forward 12-month price-to-sales (P/S) multiple of 2.9, slightly higher than FormFactor’s 2.7. While Micron’s valuation premium reflects its scale, profitability and near-term growth trajectory, FormFactor’s discount pricing is likely to factor in its current margin headwinds and more modest revenue growth.

Micron shares have jumped 47% year to date, while FormFactor shares have plunged 35.8%.

Conclusion: Micron Holds the Edge

Both companies play vital roles in the AI-driven semiconductor supply chain, but Micron offers stronger near-term growth and higher profitability. Its leadership in DRAM, NAND and HBM, alongside substantial investments in enhancing fabrication and packaging capabilities, gives it a strategic advantage. FormFactor’s technology portfolio and customer base are impressive, but profitability pressure due to a lower-margin product mix, higher operational costs and tariffs remains a concern.

Currently, Micron carries a Zacks Rank #3 (Hold), while FormFactor has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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