Technology stocks have made an impressive recovery in the past three months or so following a difficult start to the year when a variety of factors, including a tariff-induced trade war, lofty valuations, and the lack of interest rate cuts by the Federal Reserve this year, spooked some investors.
The tech-laden Nasdaq Composite index has jumped a remarkable 21% in the space of just three months (although it's up just 7% year to date). This broad market rally explains why many technology names have also shot up big time of late, recording a parabolic increase in their stock prices. A parabolic move refers to a rapid increase in the stock price of a company in a short time, identical to the right side of a parabolic curve.
Two tech stocks in particular have been crushing the market of late and have the potential to make another parabolic move thanks to their stunning growth profiles.
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1. Micron Technology
Memory specialist Micron Technology's (MU +3.70%) stock spiked 58% in the past three months. But even after this recent surge, you can buy the chipmaker at an extremely attractive valuation since it is trading at just 22 times trailing earnings. The forward earnings multiple of just 10 is even more attractive. Given the strong forecasted growth rates for Micron, it has strong potential to be a no-brainer buy.
NASDAQ: MU
Key Data Points
Micron's revenue in the third quarter of fiscal 2025 (which ended on May 29) was up by 37% year over year to $9.3 billion. Its adjusted earnings grew by over 3x to $1.91 per share on the back of a massive jump in its margins. The memory chip manufacturer has received a big artificial intelligence (AI)-powered boost in recent quarters.
AI accelerators from the likes of Nvidia (NVDA +0.99%), AMD, Broadcom, and Marvell Technology are packing in huge amounts of high-bandwidth memory (HBM) so that large amounts of data can be transmitted at terrific speeds in AI data centers. Market research provider Yole Group estimates that the HBM market's revenue could double in 2025, leading to a 17% jump in the overall memory market's revenue to $200 billion.
Importantly, the booming demand for both compute and storage memory chips used in data centers and high-performance computing (HPC) could take the overall memory market's revenue to $302 billion in 2030, implying a 50% increase from this year's estimated revenue. Investors can capitalize on this lucrative incremental growth opportunity with Micron's help, as it controls 24% of the dynamic random-access memory (DRAM) market and around 12% of the NAND (short for NOT AND) flash storage market.
The company also seems to be gaining ground in memory chips. Samsung, which is one of the top three players in this market along with SK Hynix and Micron itself, seems to be struggling for traction in HBM. As such, it is easy to see why Micron's earnings growth estimates have received a major boost of late.
Data by YCharts.
The company's improved earnings power and its cheap valuation suggest that its parabolic run has plenty left in the tank to keep going. The market could reward Micron with a premium multiple, considering its outstanding growth.
2. Nvidia
After rising 43% in just three months, Nvidia is also on a parabolic run right now. However, Wall Street seems to be underestimating the company's growth potential -- and that's precisely why I believe that it can sustain its current rally going forward.
NASDAQ: NVDA
Key Data Points
When Nvidia released its fiscal 2026 first-quarter results (for the three months ended April 27, 2025) almost two months ago, it exceeded consensus expectations despite being hamstrung by restrictions on sales to Chinese customers. Nvidia's guidance was also ahead of expectations, even though it is on track to lose $8 billion in potential revenue due to export restrictions to China.
Analysts expect Nvidia's revenue to increase by 53% in the current fiscal year to just under $200 billion. The company's top line jumped 69% year over year in fiscal Q1, and it won't be surprising to see it maintain that terrific momentum thanks to the new sales opportunities that are coming its way beyond China.
Nvidia is gaining business for its AI chips around the globe. It partners with 18 telecom companies globally to build sovereign AI (i.e., government-funded) infrastructure on five continents. Nvidia reportedly sold $17 billion worth of chips to China in the previous fiscal year. Its push into sovereign AI could help it mitigate the loss of Chinese business, as Bank of America estimates that sovereign AI could unlock a $50 billion annual revenue opportunity for the company.
Investment banking firm Oppenheimer, on the other hand, has a more ambitious forecast and expects the global sovereign AI market to generate a $1.5 trillion annual revenue opportunity. Given that Nvidia is reportedly involved in almost every deal for rolling out sovereign AI, as per Citi, investors would do well to look past the lost opportunity in China.
There is a solid chance of Nvidia outpacing consensus estimates going forward, and that could give its parabolic rally a nice shot in the arm.
