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Micron is well-positioned to benefit from the demand-supply mismatch in the memory market.
Alphabet is monetizing its AI technologies at a global scale.
Both companies saw significant share price gains in 2025 and still trade at reasonable valuation levels compared to their future growth prospects.
The most durable artificial intelligence (AI) investments for the next decade will not be defined by a few earnings beats or a short-term growth spurt, but by companies that are deeply integrated in the ongoing AI adoption and monetization trends. According to The Motley Fool's 2026 AI Investor Outlook Report, nine out of 10 AI investors plan to hold or buy additional AI stocks in the next 12 months. The opportunity, however, lies in identifying companies that are riding long-term AI-powered tailwinds, while still trading at reasonable valuations.
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Here's why Micron Technology (NASDAQ: MU) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), which are trading at forward price-to-earnings (P/E) multiples of 7.1x and 27.9x, respectively, can be two such relatively undervalued AI picks to buy and hold for the next decade.
Micron's earnings performance for the first quarter of fiscal 2026 (ending Nov. 27, 2025) marks a significant improvement from the past several quarters. Revenue soared 57% year over year to $13.6 billion, while earnings per share (EPS) surged 167% year over year to $4.78. This performance was primarily driven by strong demand for DRAM and NAND memory from data center and AI customers, which far outpaced available memory supply.
High-bandwidth memory (HBM, a type of DRAM used extensively in AI workloads) is a major long-term growth catalyst for Micron. The company has already committed its 2026 HBM output, with volume and pricing agreements in place. Any incremental increase in supply is not expected to fill the demand-supply gap. Hence, Micron expects the HBM market to grow from $35 billion in 2025 to $100 billion in 2028. With 21% share of this rapidly expanding market opportunity, the company will enjoy impressive revenue visibility and high pricing power in the coming years.
Memory is no longer a commoditized system, but an essential strategic component that determines the performance of AI systems, operating across data centers, autonomous vehicles, advanced medical diagnostics, or even edge applications. Memory content per device across AI servers, AI PCs, or even edge devices is also growing exponentially. So, considering the company's future growth potential across multiple AI technology generations, the stock can prove to be an earnings compounder in the long run.
Alphabet is not an undervalued AI stock in absolute terms, but it appears reasonably priced considering its scale, unit economics, and competitive advantages. The company's AI infrastructure, which includes Gemini AI models, AI-optimized TPUs, and global distribution capabilities, is already driving higher monetization while improving cost efficiency across its digital advertising and cloud businesses.
Alphabet is leveraging AI-powered targeting and automation capabilities to improve user engagement, ad conversion efficiency, and revenue for its Search and YouTube businesses. The company also exited the third quarter with a Google Cloud backlog of $155 billion, providing multiyear revenue visibility. With over 70% of Google Cloud customers already using the company's AI products, AI usage is clearly becoming a key growth catalyst.
Alphabet has also managed to limit costs with its custom TPUs, which deliver higher performance and better energy efficiency in both training and inferencing workloads. This cost benefit will magnify as AI workloads scale and pricing pressures intensify across the market.
Alphabet also enjoys access to valuable and timely first-party data, supported by over 3 billion monthly active Android devices and over 2.7 billion monthly active YouTube users globally. Taken together, this ecosystem positions Alphabet as an attractive buy-and-hold pick for the next decade.
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Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
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