This year has been absolutely brutal for technology stocks so far. In particular, the semiconductor industry has witnessed some notable sell-offs. As of market close on March 21, shares of Nvidia were down 12% on the year. Peers such as Taiwan Semiconductor Manufacturing and Broadcom have declined by 10% and 17%, respectively.
But one chip stock that has actually outperformed many of its peers so far in 2025 is Micron Technology (MU 6.93%), with a gain of roughly 12%. Despite these gains, Micron remains relatively under the radar in the artificial intelligence (AI) arena, and the stock is an absolute bargain right now.
Let's dig into why the company is quietly emerging as an important player in the chip space and assess its valuation relative to its peers.
NASDAQ: MU
Key Data Points
Why is Micron becoming increasingly important for AI workloads?
Building AI applications requires the ability to move large data sets efficiently. Without this, processing data inside large language models (LLMs) and other AI applications would create a logjam, ultimately taking a toll on productivity and automation.
Micron is helping to solve this through the power of high-bandwidth memory (HBM), a mechanism that provides AI chips the ability to process data at materially faster speeds compared to legacy memory and storage solutions.
As AI workloads move beyond more basic applications, such as chatbots, and transition to increasingly more complex fields like autonomous driving, machine learning, or robotics, the need for HBM is expected to rise considerably.
Image source: Micron Technology.
Micron's growth is impressive, and the ride is just getting started
The charts below illustrate Micron's revenue and earnings trends over the last three years. Like many of its peers in the chip realm, revenue has entered a period of continued acceleration underscored by widespread AI adoption. But what I find more encouraging is that the strong demand tailwinds have helped the company transition from a cash-burning business to one that is now consistently profitable.
MU revenue (quarterly) data by YCharts.
Just a few days ago, Micron reported earnings for the second quarter of its fiscal 2025. While the latest batch of financials were encouraging, CEO Sanjay Mehrotra shared some guidance that should have investors jumping for joy. He said that next quarter is expected to produce record revenue, and for the full year, management is calling for "significantly improved profitability."
The combination of accelerating revenue, improved unit economics, and its unique application in the broader chip industry makes the company a compelling opportunity for long-term investors. Below, I'll dig into the stock's valuation to make my case for why it should be on the radar of AI investors.
Micron is a bargain that is too good to pass up
The analysis below benchmarks Micron against a cohort of other leading chip stocks on a forward price-to-earnings (P/E) basis.
MU PE Ratio (Forward) data by YCharts.
Not only is Micron the cheapest stock among this peer set based on its forward P/E, but the trends above also show some serious multiple compression over the last year. At just $94 per share, the stock is trading close to a 52-week low.
I find this odd considering the company is generating record sales on a consistent basis, it's now profitable, and management is forecasting even more robust growth. At the end of the day, I think the fundamentals in Micron's underlying business are largely disconnected from the company's valuation.
Right now, I see the stock as an absolute bargain in what is perhaps the hottest area supporting the AI revolution (i.e., chips). I think investors who are looking for less obvious opportunities in the AI chip space and are interested in long-term growth should consider buying the dip in Micron stock hand over fist right now.
