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Micron Technology is a promising semiconductor stock with significant AI-related upside potential.
Micron is generating record revenue and growing earnings, driven by strong demand for its high-bandwidth memory (HBM) products.
Micron’s stock is undervalued relative to its future earnings potential, making it an attractive investment opportunity.
The stock price of Micron Technology (NASDAQ: MU) has rocketed 167% year to date, yet it still offers promising upside potential over the next several years. The memory chip supplier is reporting record revenue, and it's just getting started. Management indicated on its last earnings call that the AI data center buildout is a multiyear boom, positioning Micron as one of the top semiconductor companies to benefit.
Image source: Getty Images.
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Micron is well-positioned to be one of the biggest beneficiaries of the AI data center buildout. Its revenue surged 49% year over year in the recent quarter, which also boosted its margins. Adjusted earnings per share exploded to $8.29 in fiscal 2025, ending in August, up from $1.30 in fiscal 2024.
The insatiable demand for more data center capacity is driving the limited supply of Micron's high-bandwidth memory (HBM). Management noted on its fiscal Q4 earnings call that it expects to sell out the remaining supply of HBM for calendar 2026 soon.
Despite unprecedented demand, Micron is not flooding the market with more supply to chase growth. It is maintaining a disciplined inventory strategy to keep margins up. This is expected to drive record profitability over the next few years, setting up strong earnings growth prospects that are not reflected in the stock's valuation.
The stock trades at just 13 times fiscal 2026 earnings estimates. This may undervalue Micron's opportunity in AI data centers and lead to handsome gains for investors even from current high share prices.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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