We recently compiled a list of the 10 Best Semiconductor Stocks to Buy for the AI Boom. In this article, we are going to take a look at where Micron Technology, Inc. (NASDAQ:MU) stands against the other semiconductor stocks.
More than two years have passed since the proliferation of the disruptive Artificial Intelligence (AI) megatrend, symbolically marked by the launch of OpenAI’s revolutionary product – ChatGPT. Since then, the AI revolution has accelerated rapidly, with 2023 and 2024 seeing a surge in demand for advanced AI applications across industries. This transformation has driven companies to increasingly rely on robust data centers that can support the computational power required by the intelligent algorithms.
In tandem with the rise of AI, the data center sector has experienced substantial growth. The need for larger, more efficient, and scalable data storage and processing capabilities has created a boom in infrastructure investments. Data centers, which house the powerful servers needed for AI workloads, have become critical enablers of this technology’s expansion. This increase in demand for data center capacity is a key factor that has propelled semiconductor stocks, as these centers rely heavily on cutting-edge semiconductors to deliver the speed, efficiency, and power necessary to process vast amounts of data in real time.
Our Methodology
We shortlisted 35 semiconductor stocks using the holdings of iShares’ Semiconductor ETF. Then we merged these stocks with Insider Monkey’s proprietary hedge fund holdings database and identified the 10 most popular hedge fund semiconductor stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up view of a computer motherboard with integrated semiconductor chips.
Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Micron Technology, Inc. (NASDAQ:MU) is a leading global semiconductor company specializing in memory and storage chips, with its primary revenue driven by DRAM and additional exposure to NAND flash chips. Serving a diverse global market, Micron supplies chips for data centers, mobile devices, consumer electronics, industrial applications, and automotive use, leveraging its vertically integrated business model.
Micron Technology, Inc. (NASDAQ:MU) had a strong start to FY2025, with revenue, gross margin and EPS at or above the midpoint of the guidance range. The bulk of strength comes from data center revenue growing over 400% YoY and 40% sequentially, reaching a record level, with data center revenue mix surpassing 50% of the company’s revenue for the first time. MU also delivered record amounts of SSDs, while high-bandwidth memory (HBM) shipments were ahead of schedule, with revenue more than doubling sequentially. The company also rides the effects of Chips and Science Act, finalizing an agreement with the US Department of Commerce for an award of up to $6.1 billion to support advanced DRAM manufacturing fabs in Idaho and New York.
Management of Micron Technology, Inc. (NASDAQ:MU) provided detailed commentary on its HBM potential, which is central to the growth story, during the Q1 2025 earnings call. Here is what they said:
“The HBM market will exhibit robust growth over the next few years. In 2028, we expect the HBM total addressable market (TAM) to grow four times from the $16 billion level in 2024 and to exceed $100 billion by 2030. Our TAM forecast for HBM in 2030 would be bigger than the size of the entire DRAM industry, including HBM, in calendar 2024. This HBM growth will be transformational for Micron, and we are excited about our industry leadership in this important product category.”
Overall MU ranks 5th on our list of the best semiconductor stocks to buy for the AI boom. While we acknowledge the potential of MU as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.