While the majority of headlines regarding artificial intelligence (AI) focus on Nvidia, Advanced Micro Devices, and Alphabet, one overlooked segment is high-bandwidth memory (HBM).
Graphics processing units (GPUs) and chips require massive amounts of memory, and Micron Technology's (MU 3.21%) HBM capabilities are meeting this demand. One reason investors should consider buying Micron before 2027 is that there are only three companies in the world that can produce HBM at scale, and the demand for this specialized memory is expected to grow tenfold in the coming decade.
NASDAQ: MU
Key Data Points
The memory market is booming
The memory market was depressed and declining for years, but now Micron is on a multi-year upswing. Revenue in Micron's latest quarter was $13.6 billion compared to $8.7 billion a year ago. Operating cash flow also improved significantly, up to $8.4 billion versus $3.2 billion for the same period last year.
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The stock is largely undervalued compared to other AI-related companies. Micron's current forward price-to-earnings (P/E) ratio is just under 11 as of Jan. 9. That's well under the tech industry average of 26. Micron stock has risen nearly 250% in the past 12 months.
Demand for HBM isn't going anywhere
Micron specializes in HBM, a highly specialized technology that requires significant capital investment and refinement. This is where Micron truly distinguishes itself from its competitors. There aren't many companies that serve this niche, and any new competition would need years to catch up.
The company has the power to raise prices based on this limited supply and ever-increasing demand. This lack of supply issue won't be resolved for at least a few more years, either. Micron investors hold a lot of power in that regard. Investors should consider buying Micron now to take advantage of its competitive edge.
