Broadcom (AVGO +1.36%) is one of the key players in the market for artificial intelligence (AI) chips. The company designs and sells custom processors that help hyperscalers lower the operating costs of their data centers. Not surprisingly, the market will be paying attention to the chip designer when it reports fiscal 2025 fourth-quarter results on Dec. 11.
The company has built a solid customer base that includes the likes of OpenAI, Meta Platforms, and Alphabet. Broadcom has seen healthy growth in its AI revenue in recent quarters, a trend that's likely to continue in the future given its sizable addressable market.
There's another important AI chipmaker -- Micron Technology (MU +2.70%) -- that's set to release its results in December as well. The share price of this company is up 166% so far in 2025, handily beating Broadcom's returns. Despite this performance, it's trading at a cheaper valuation than Broadcom.
Let's look at the reasons why Micron is my top AI stock to buy in December.
Image source: Micron Technology.
Micron Technology is on track to deliver phenomenal growth
Micron is set to release its fiscal 2026 first-quarter results (for the quarter that ends in November) on Dec. 17. The memory specialist's management guided for $12.5 billion in revenue for fiscal Q1, which would be a 45% increase from the year-ago period. The non-GAAP earnings guidance of $3.75 per share would be more than double the year-ago period's reading of $1.79 per share.
NASDAQ: MU
Key Data Points
This impressive growth will be driven by the favorable demand-supply environment in the memory market, which is booming right now thanks to AI. Chip designers such as Broadcom, Nvidia, AMD, and Marvell Technology have been integrating bigger and faster memory, known as high-bandwidth memory (HBM), into their AI chips to enhance computing power and reduce latency.
As a result, the demand for server memory chips is outpacing supply, leading to a spike in prices. Market research firm Counterpoint Research estimates that the price of dynamic random access memory (DRAM) has shot up by 50% in 2025 so far. This trend is expected to continue in 2026, with server DRAM prices expected to double by the end of 2026.
Meanwhile, Counterpoint expects a 50% increase in overall memory prices by the second quarter of 2026. As a result, there is a high possibility of Micron reporting stronger growth in its revenue and earnings next year. This explains why analysts increased their revenue and earnings expectations for both the current and the next fiscal years.
Data by YCharts.
Even better, Micron seems capable of maintaining its outstanding growth rates beyond the next couple of years. That's because the market for AI-specific memory chips is expected to clock an annual growth rate of 30% through 2030, according to Micron's peer SK Hynix. So it won't be surprising to see Micron stock turning out to be a solid long-term investment, especially considering its attractive valuation.
The stock's valuation is too attractive to ignore right now
Though Micron stock has shot up substantially this year, it can still be bought at 27 times trailing earnings. That's a discount to the tech-laden Nasdaq-100 index's average earnings multiple of 32. The company's forward earnings multiple of 13 is even more attractive, thanks to the big bottom-line increase it's expected to deliver.
What's more, Micron stock is undervalued when the company's long-term growth potential is taken into account. That's evident from its price/earnings-to-growth ratio (PEG ratio) of just 0.18, based on its estimated annual earnings growth rate for the next five years, as per Yahoo! Finance. A PEG ratio is a forward-looking valuation metric that's calculated by dividing the trailing earnings multiple by the projected annual earnings growth rate for the next five years.
A reading of less than 1 means that a stock is undervalued with respect to its growth potential. Micron is trading well below that threshold, which means that investors are getting a great deal on this AI stock. And given that Micron's upcoming earnings could give its stock price another boost, it may be a good idea to buy more of its shares before it releases its earnings in December.
