The rapid proliferation of artificial intelligence (AI) is greatly boosting Micron’s (MU) revenue and results and will likely continue to do so in the future. One of MU’s biggest opportunities in the AI space involves selling its high-bandwidth memory chips to Alphabet’s (GOOG) (GOOGL) Google. Given MU’s almost absurdly low valuation, its stock is likely to get a much bigger boost than Google’s if the tech giant’s potential chip deal with Meta (META) materializes.
And in any case, Micron stock looks poised for a long-term boom as the AI revolution continues.
Micron, a leading developer of memory chips used to power a wide variety of computing devices and artificial intelligence data centers, has a high market capitalization of $266 billion.
However, the stock has a relatively low price-to-earnings ratio of 30.2 times and an extremely low forward price-to-earnings ratio of 14.8. The stock’s valuation is especially cheap in light of the company’s strong growth. In the company’s fiscal year ending in August, for example, its revenue rose to $37.38 billion from $25.11 billion over the previous year, while its operating cash flow soared to $17.5 billion from $8.5 billion.
MU shares are up 99% in the three months ending Nov. 29, as many on the street are apparently gaining an appreciation for the first time of the company’s ability to benefit greatly from the AI boom in the years to come.
Meta reportedly held talks about purchasing billions of dollars worth of Google’s Tensor Processing Unit (TPU) chips. TPUs, according to Google, “are custom-designed AI accelerators that are optimized for AI model training and inference.” Meanwhile, startup Anthropic, which has become a major OpenAI competitor, will buy up to 1 million TPU chips, and the CEO of Salesforce (CRM) plans to use Google’s Gemini 3 AI model instead of OpenAI in the future, indicating that Salesforce itself could do the same.
Micron looks set to get a big boost from Google’s success, with Japanese bank Mizuho recently stating that Micron would be boosted by the proliferation of TPUs. Additionally, the bank predicted that the chipmaker could provide better-than-expected guidance for the quarter ending in February.