Artificial intelligence (AI) stocks delivered another year of impressive returns to investors in 2025, as is evident from the 30% jump in the Global X Artificial Intelligence & Technology ETF -- the largest AI-focused exchange-traded fund.
The sector did well despite starting 2025 on the back foot for reasons that included President Donald Trump's tariff-induced trade wars and concerns about the huge amounts of money being spent on AI infrastructure. Those concerns were amplified after Chinese tech startup DeepSeek claimed that it had been able to train its large language model for a fraction of what the likes of OpenAI have been spending.
Following their remarkable surges over the past year, most of the top AI stocks -- names like Nvidia, Palantir, Broadcom, and Snowflake -- are trading at expensive sales multiples, lofty earnings multiples, or both. However, there is one AI stock that can be bought at an incredibly cheap valuation right now, despite having risen 250% in the past year -- Micron Technology (MU 2.52%).
Here's why this semiconductor company could be the biggest bargain buy of 2026.
Image source: Micron Technology.
Micron Technology is too cheap to ignore right now
For a company that reported a 57% year-over-year increase in revenue and a 167% increase in non-GAAP (adjusted) earnings in its latest quarter, a trailing earnings multiple of 27 is a massive bargain. Even better, Micron anticipates that in the current quarter, its top line will jump by 132% year over year to $18.7 billion, and its adjusted earnings will jump more than fivefold.
NASDAQ: MU
Key Data Points
Therefore, Micron's valuation suggests that the market has not yet fully priced its growth potential into the stock. Consensus estimates are projecting its earnings will increase nearly fourfold in its next fiscal year to $32.14 per share. Not surprisingly, Micron has a forward earnings multiple of just 9, well below the tech-laden Nasdaq-100 index's forward price-to-earnings (P/E) ratio of 26.
If the market decides to reward Micron with a higher multiple and it trades at a forward P/E in line with the Nasdaq-100's average after a year, its stock price could shoot up remarkably. More importantly, Micron is indeed capable of hitting Wall Street's earnings expectations.
The memory market boom will be a big catalyst for the stock
Demand for memory chips is far outstripping supply. A significant chunk of the available high-bandwidth memory production is being deployed in AI accelerator chips such as graphics processing units. As a result, there is a shortage of the memory chips used in smartphones and personal computers. This shortage has driven a massive increase in memory prices.
Those prices are likely to go higher in 2026. Server memory prices could even double, driven by the booming demand for the high-bandwidth memory (HBM) that goes into data center chips. At the same time, memory manufacturers such as Micron are expected to keep a check on the production capacity they bring online to support the higher prices.
Market research firm IDC anticipates that memory supply growth in 2026 will be around 16% to 17%, which is lower than the usual rate. For comparison, the HBM market alone is poised to grow at an annualized rate of 42% through 2033.
So Micron's stunning share price growth could continue beyond 2026, especially considering that spending on AI data centers could hit a whopping $1.2 trillion in 2030. All this suggests that Micron could turn out to be a long-term winner, which makes buying the growth stock at its current dirt-cheap valuation a no-brainer decision.
