Artificial intelligence (AI) stocks have been some of the best assets to own over the past five years. But after the compelling gains they've already produced, investors who haven't already been capitalizing on the trend may feel like they missed their chance.
However, the AI opportunity is still massive, and right now, there's one AI stock in particular that looks ridiculously undervalued based on its growth potential and valuation. It trades at a forward P/E ratio of 10, and it just delivered revenue growth of more than 50% year over year.
That stock is Micron (MU 3.21%), and with memory solutions gaining more traction, the company has a solid runway for future gains.
Memory is an AI buildout bottleneck
Image source: Getty Images.
AI accelerator chips are designed to process large amounts of data quickly. But to do that, they need that data stored nearby and rapidly accessible, which demands high-end memory storage solutions like the ones Micron provides.
NASDAQ: MU
Key Data Points
Micron isn't the only player in the industry, but it's one of the biggest, with a market cap approaching $400 billion. Its stock price more than tripled over the past year, so it's not exactly the biggest secret in the investing world. However, its forward P/E ratio is probably the lowest you will find among AI stocks.
It's valued like a low-growth stock while delivering compelling growth in the economy's hottest industry. Micron delivered 56.7% year-over-year revenue growth in its fiscal 2026 first quarter, which ended Nov. 27, while boosting its profits by 180.2%.
Considering that big tech companies have already committed to spending more money on AI this year than they did last year, Micron is poised to capitalize on a growing opportunity and deliver exceptional returns.
Micron's fastest-growing revenue segment is also its largest
The company's cloud memory business unit almost doubled year over year and brought in $5.3 billion of the company's $13.6 billion. It's the largest of Micron's business units, which suggests that its revenue growth should continue to accelerate.
Micron has issued an optimistic forecast for its fiscal Q2, and as the cloud memory segment makes up more of the total business, it should lift the company's overall revenue growth rate.
Some companies that are participating in the AI megatrend only generate a small fraction of their sales or earnings from AI-related endeavors. However, Micron has been quietly sitting at the center of this boom since it began. It would be easier to understand Micron's relatively low forward P/E ratio if its cloud memory business contributed only a minor fraction of its total sales. However, that's not the case.
All things considered, Micron's guidance, growth rates, and valuation make it one of the safest AI stocks in the market.
