One of the biggest trends we have seen in recent years is the increasing use of artificial intelligence (AI) in businesses and our personal lives. This helped propel some of last year's most significant stock returns in companies like NvidiaMicrosoft, and Palantir.

But beyond these names, a few others are equally well positioned to reap enormous benefits from the rise of AI. Micron (MU 5.01%), a leading memory producer, is one of them.

Cloud computing.

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Micron supplies the picks and shovels for the AI industry

AI has been used for years. Still, it has recently gained momentum as technology matures in areas like generative AI, leading to the proliferation of new AI-enabled services like ChatGPT. The recent development in AI has been so significant that Bill Gates declared it one of the most important technology revolutions in his lifetime.

While these new AI software and services gain most of the limelight, investors should not lose sight of the improvement in hardware that enabled these developments. Like its more prominent peer, Nvidia, Micron is an essential player in the hardware that spurred the development of AI.

Let's start with memory solutions (DRAM) in data centers that enable AI systems to perform complex computations. Since complex AI algorithms typically require a high level of computation to process massive amounts of data, data centers must have significant investment in high-quality memory solutions, an area in which Micron is an expert.

But that's just one part of the equation. Data centers must also store ever-increasing data sets for training these AI models. This means the demand for NAND flash memory and solid-state drives (SSDs) that provide high-speed storage for AI systems will grow, which is another tailwind for Micron.

Beyond data centers, there is an increase in the use of AI at the edge -- PCs, smartphones, embedded sensors in industries, etc. Even in areas like generative AI, which has historically been carried out at data centers, AI is set to grow at the edge due to benefits like real-time analysis, improved efficiency, and others.

For example, the gradual movement of vehicles toward autonomy will lead to an ever-growing demand for memory and storage as automakers expand features in an advanced driver-assistance system (ADAS) in the short term and complete autonomy in the long run. These developments will increase the demand for more robust and specialized memory and storage solutions.

All these point to growth opportunities for Micron in the coming years.

Micron has a deep pocket to invest in the future

Micron is riding on a massive AI tailwind. But to reap the benefits, the company must constantly invest in new technology and build new capacity to keep up with industry developments. And this is not cheap.

To put it into perspective, Micron invested $7 billion in capital expenditures in its fiscal-year 2023 (FY23) and is expected to invest slightly more than $7 billion in fiscal-year 2024. It also spent $3 billion in research and development costs in FY23.

Another example is to consider Micron's pledge to invest $100 billion in the next 20 years to build the largest semiconductor fabrication facility in the U.S. The first phase of this investment would cost $20 billion, expected by the end of this decade. And that's just one fabrication facility!

Fortunately, Micron has the will and means to see these investments through. For example, it generated nearly $17 billion in operating cash flow in the last two fiscal years. It also has around $12 billion of liquidity -- cash, short-term and long-term marketable investments, restricted cash, and undrawn revolver capacity -- and its debt (net of cash and short-term investments) remains low at less than $5 billion.

In other words, Micron has the necessary firepower to invest for growth. It can fund its investment by reinvesting its profits, using its existing liquidity, or, if necessary, accessing the capital market for debt and equity thanks to its solid balance sheet.

What it means for investors

The rise of AI is expected to be life-changing in both individual lives and business environments.

While most investors focus on apparent winners like Microsoft and Alphabet, intelligent investors will branch out beyond these popular names to search for potential investment candidates.

As one of the world's leading memory and storage suppliers, Micron stands to benefit from the growing demand for its products and solutions in the AI world.

Intelligent investors should keep it on their radar.