At his company's recent Annual Product Expo, Nvidia (NVDA 2.13%) CEO Jensen Huang predicted that Nvidia's artificial intelligence (AI) processors would generate $1 trillion in sales through 2027.
Obviously, Nvidia is one way to play that sales potential. But Nvidia is already the world's most valuable company by market cap.
Everybody knows the story with Nvidia. But there's a less prominent stock that I think will become one of the biggest beneficiaries of the company's $1 trillion sales projection.
It's Micron Technology Inc. (MU +0.59%), a major supplier to Nvidia of a critical component that is in the middle of a colossal shortage.
Image source: Getty Images.
Don't forget to remember
Micron produces memory -- that is, random access memory (RAM) and dynamic random access memory (DRAM). These components are what allows a computer to store and recall information, and AI needs vast amounts of memory.
The graphics processing units (GPUs) that Nvidia is famous for aren't really single chips. They feature several components that allow them to work their magic. One of those components is a memory chip.
Micron is behind the HBM4 36 gigabyte (GB) memory chip in Nvidia's new Vera Rubin GPU, and it recently began high-volume production of that chip.
Micron is also one of only three large volume memory producers in the world. The other two are Samsung and SK Hynix.
The memory shortage is so bad that prices for RAM are expected to rise 50% over the first quarter of 2026, compared to where they were at the end of 2025. Intel's (INTC 2.20%) CEO Lip-Bu Tan has reason to believe there will be no relief to the memory shortage until at least 2028..
AI is gobbling up every available RAM and DRAM chip on the market, and with the limited number of companies producing memory, each company is set for massive growth.
NASDAQ: MU
Key Data Points
Look no further than Micron's price/earnings-to-growth (PEG) ratio, which incorporates future earnings growth into a company's price-to-earnings (P/E) ratio. A PEG of 1 is the ideal fair-value, but anything under 1 means a stock is potentially undervalued. Micron is currently sitting at a PEG ratio of 0.44.
The company's annual earnings per share (EPS) for 2025 came in at $8.29, beating expectations by $0.20. Not bad.
But Micron's projected EPS for 2026 is $51.49, or over six times its actual EPS for 2025. The memory shortage driving up prices is the main reason for Micron's sky-high earnings projections.
On March 18, Micron released its results for the second quarter of its fiscal 2026. Its projected EPS was $8.73, and it beat that projection by $3.47 and came in at $12.20 for the quarter. In percentage terms, that's an almost 40% earnings beat.
The rest of Micron's earnings report was even more impressive.
Making some good memories
For the second quarter of Micron's fiscal 2026, it brought in $23.9 billion in revenue. That's up 75% quarter over quarter and up 196%, almost triple its revenue for Q2 2025.
The company's net income was even more impressive. It came in at $14 billion for the quarter, up 686% over Q2 2025. Micron's net margin grew from 22% in Q2 2025 to 59% for Q2 2026.
Not to put too fine a point on it, but Micron's $12.20 EPS is a 682% increase over Q2 2025. Growth like that really speaks for itself.
It's worth noting that Micron's growth is likely a temporary thing. Its EPS is expected to peak in 2027 at $86 before beginning to come back down to earth as the memory crisis is alleviated and production by Micron and its competitors catches up to demand. This would actually line up nicely with Lip-Bu Tan's timeline.
Still, by that point Micron will have likely grown into an absolute titan in the industry. I expect it will be helped along in that endeavor by the new factory it broke ground on this January.
The plant, based in upstate New York, will cost Micron $100 billion. Once completed, it will be the largest semiconductor factory in the United States. So, Micron is positioning itself to be one of the most dominant tech hardware companies in the world.
And that's good, because while some analysts and Lip-Bu Tan project the memory shortage could last until 2028, Chey Tae-Won, the chairman of SK Hynix said earlier in March that the memory shortage may persist until 2030. The company projects a 20% shortage through the end of the decade.
Memory is usually a cyclical industry but signs are pointing to this being a lasting shortage rather than a temporary crunch. It will take years for Micron and its rivals in memory chips to scale their production to meet the demand from AI.
If it keeps making memory for Nvidia, which I think is likely, Micron and its shareholders may end up being even bigger beneficiaries of Nvidia's $1 trillion sales projection than Nvidia itself.
