Semiconductor giant Nvidia continues to be a Wall Street favorite -- and for all the right reasons. The company's transition from a prominent GPU company to a full-stack artificial intelligence (AI) infrastructure provider has been genuinely exceptional. Its full-stack solution includes its Hopper and Blackwell architecture chips, AI-optimized networking interconnections, and a robust software ecosystem. As cloud services providers and enterprises invest heavily in building and expanding their AI infrastructure, Nvidia is well positioned to benefit.
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As of July 10, Nvidia's shares were up 22.2% in 2025. However, a few AI-powered stocks that are less famous have significantly outperformed it year to date. Among them is Micron Technology (MU 0.44%), which is up 46.2% in 2025. While many investors appreciate this business, few seem to understand all the growth catalysts that will drive its share price performance.
Where Micron's growth will come from
AI is fundamentally transforming Micron's business model and its growth trajectory. In its fiscal 2025 third quarter (which ended May 29), the company's data center revenues more than doubled year over year and reached record levels, as high bandwidth memory (HBM) and storage are becoming increasingly critical for supporting complex AI workloads and applications. Micron's HBM revenues were up by around 50% sequentially, and the business has reached an annual run rate of more than $6 billion.
NASDAQ: MU
Key Data Points
Bloomberg Intelligence has estimated that from 2023 to 2033, the HBM chip market will grow at a compound annual rate of 42%, from $4 billion to $130 billion. That exceptionally rapid growth outlook is based on the fact that increasingly complex AI models require higher amounts of low-latency memory, and the expectation that many enterprises will transition from high-performance computing to advanced AI applications.
To capitalize on this opportunity, Micron has been actively shifting more of its production capacity to advanced HBM architectures that offer higher memory capacity and bandwidth. With Micron being one of the only three global HBM providers (SK Hynix and Samsung are the other two), the company expects its HBM market share to be equal to its DRAM share by the second half of 2025.
Micron is also seeing strong momentum in the market for data center and client SSDs (solid state drives). It recently became the No. 2 brand in data center SSDs for the first time. Additionally, the company stands to benefit from increasing memory demand in the PC segment, fueled by a Windows 11 upgrade cycle and the growing adoption of AI-enabled PCs across the world.
Technology leadership and manufacturing expansion
Micron's 1-gamma DRAM technology node leverages the most advanced semiconductor manufacturing technology -- extreme ultraviolet (EUV) lithography, which uses shorter wavelengths of light to pattern integrated circuits on silicon wafers. That allows each feature of a chip to be smaller, meaning more transistors can be squeezed onto each chip. For Micron, applying this advanced technology has led to a 30% improvement in bit density (higher memory storage in the same physical space), a 20% reduction in power consumption, and as much as 15% higher performance (faster data movement) compared to its previous 1-beta node technology.
The company is also planning to invest about $200 billion in expanding its U.S. footprint over the next 20-plus years -- putting $150 billion into its manufacturing infrastructure and $50 billion into research and development.
The story of the numbers
Micron Technology delivered a stellar performance in its fiscal third quarter, with record revenues of $9.3 billion (up 37% year over year) and non-GAAP diluted earnings per share (EPS) of $1.91 (up 200%). Both figures topped the company's guidance and Wall Street's consensus estimates.
For its current quarter, Micron is guiding for revenues in the range of $10.4 billion to $11 billion, and a gross margin in the range of 41% to 43%.
Despite the stock's 46% gain year to date (at the time of this writing), there seems to be a disconnect between its share price and the company's fundamentals. The stock trades at just 22.5 times trailing earnings and 11.8 times forward earnings -- a significant discount to the Nasdaq-100 price-to-earnings ratio of 33.9.
While that low P/E may be due to investors' recognition of the memory industry's well-established cyclicality and their skepticism about the sustainability of AI-driven memory demand, the degree to which the stock is being discounted for that seems excessive. Micron is gradually transforming from a commodity memory producer to a leading AI infrastructure player. The company has already entered into HBM contracts with some key clients that provide pricing transparency and demand visibility not seen in traditional memory contracts. In light of all that, the company may soon witness a valuation multiple expansion that drives up its share price.
Considering these catalysts, Micron seems like an appealing stock pick now.
