When it comes to the generative artificial intelligence (AI) hardware, no company stands out as much as Nvidia. The tech giant produces most of the cutting-edge chips needed to power AI algorithms, and business is booming. That said, with a market value of $4.5 trillion, it is already the largest company on the planet. And it might be time for investors to start looking for the next big thing in the AI hardware opportunity.
Enter Micron Technology (MU 3.19%). With shares up 317% over the last 12 months, the memory giant is quickly following in Nvidia's footsteps as AI boosts demand for its computer memory hardware. Let's dig deeper to see how much longer the company's bull run might last.
NASDAQ: MU
Key Data Points
Why Micron?
It's fair to say that Nvidia's graphics processing units (GPUs) are the most essential ingredient for running and training large language models (LLMs) because they excel at performing multiple tasks simultaneously (parallel processing). But they don't work alone. Micron's memory chips help store the vast amounts of training data and provide the working memory needed to quickly access information to answer queries. Both types of hardware are essential for building AI data centers.
Meanwhile, big tech companies continue to spend eye-popping amounts of money to stay relevant in the AI arms race. In 2025, Goldman Sachs estimated that spending could exceed $500 billion in 2026. But after new spending announcements from Alphabet and Amazon, it looks likely that total capital expenditure could exceed $700 billion. And that puts companies like Micron in a position to enjoy windfall profits in the near term.
How does Micron compare to Nvidia?
While Micron and Nvidia have historically been very different companies, the AI boom has made them much more similar than ever from a numbers perspective. Take earnings, for example. In its most recent quarter, Nvidia saw revenue jump 62% year over year to $57 billion, while its gross margin stood at 73.4%.
For comparison, Micron's top line grew 57% year over year, while its gross margin stood at 57% -- driven by strength in the company's cloud service segment, where it sells high-bandwidth memory devices for AI data center clients. While Micron's growth and margins are lower than Nvidia's, some catalysts could cause that gap to narrow over time.
Micron's AI-focused high-bandwidth memory chips can command higher prices and better margins than other types of products that serve more stagnant industries like smartphones or automobiles. Furthermore, CNBC reports that the high levels of demand have sparked a memory chip shortage that could last through 2027.
Micron is responding by ramping up production with a planned $200 billion build-out of dynamic random access memory (DRAM) capacity. But in the meantime, it should be able to command better prices and higher prices until the situation stabilizes.
How are Micron and Nvidia different?
Image source: Getty Images.
In the near term, investors should expect Nvidia's and Micron's financial performance to converge as both companies benefit from the ravenous demand for generative AI hardware. That said, the two companies have some very key differences that will likely play out over the long term.
Nvidia's margins will likely stay higher for longer because it has built an economic moat around its chips through thier advanced designs and the programming interface CUDA, which has led the industry for years. On the other hand, memory chips are highly commoditized, which means it is difficult to differentiate one from the other. Furthermore, production capacity tends to rise alongside demand, causing boom and bust cycles.
Micron's plan to pour $200 billion into new DRAM capacity and research suggests the current shortage probably won't last for the long haul. But management may aim to use the temporary windfall as an opportunity to boost market share and secure long-term scale advantages for the future.
Micron's valuation is also attractive. With a forward-price-to-earnings (P/E) multiple of just 12.5, shares trade at almost half Nvidia's forward P/E of 24. This discount seems to price in the long-term uncertainty about memory hardware margins, and leaves plenty of room for continued growth. Shares look like a buy.
