Nvidia Inventory Is Up 31% in 2025, However Here is One other Tremendous Semiconductor Inventory to Purchase in 2026, In line with Wall Avenue

• Nvidia continues to expertise unimaginable demand for its information heart chips.

• Micron Know-how provides high-bandwidth reminiscence for information facilities, which Nvidia has built-in into its GPUs.

• Micron inventory has tripled in 2025, but it surely nonetheless seems to be low cost.

• 10 shares we like higher than Micron Know-how ›

Nvidia (NASDAQ: NVDA) provides graphics processing items (GPUs) for information facilities, that are the principle chips used to develop synthetic intelligence (AI). The corporate is seeing extra demand for its merchandise than it might probably probably provide, which is fueling an enormous surge in its income and earnings.

With only one week left in 2025, Nvidia inventory is sitting on a return of almost 37%. But it surely has been trounced by one other AI semiconductor inventory, which is up by an eye-popping 229% this yr: Micron Know-how (NASDAQ: MU). This firm provides reminiscence and storage chips which are vital for AI workloads in information facilities, computer systems, and even smartphones.

The Wall Avenue Journal tracks 43 analysts who cowl Micron inventory, and the overwhelming majority suppose it is a purchase heading into 2026. Actually, not a single analyst recommends promoting. Here is why it could possibly be an important addition to any portfolio for the brand new yr.

Excessive-bandwidth reminiscence (HBM) is required to unlock the perfect efficiency from each information heart GPU as a result of it shops info in a prepared state, which accelerates processing speeds. A low reminiscence capability could cause bottlenecks by forcing the GPU to pause its computations whereas it waits to obtain extra information, whereas a excessive capability retains information flowing continuously. That is particularly vital in data-intensive AI workloads.

Micron’s HBM3E information heart answer presents 50% extra capability than the competitors, whereas consuming 30% much less power. It is a profitable mixture for AI builders that need the perfect efficiency on the lowest value, which is why Nvidia and Superior Micro Units are utilizing it of their newest GPUs.

Micron is now getting ready to ramp up manufacturing of its new HBM4E answer, which may provide as much as 60% extra capability with an extra 20% enchancment in power effectivity. The corporate says that its whole provide is already offered out for the calendar yr 2026. However this chance is just simply beginning to warmth up. Micron CEO Sanjay Mehrotra expects the marketplace for information heart HBM to virtually triple in worth by 2028, reaching $100 billion yearly.

Whereas information facilities are definitely Micron’s largest alternative proper now, many high producers of non-public computer systems and smartphones are integrating AI capabilities into their newest units. That is fueling extra demand for high-capacity reminiscence in these markets, too.

Throughout Micron’s fiscal 2026 first quarter (ended Nov. 27, 2025), 59% of its clients’ flagship smartphones wanted at the very least 12 gigabytes of reminiscence. That proportion greater than doubled from the year-ago interval.

Micron generated a file $13.6 billion in income throughout its fiscal 2026 first quarter, which was up 56% yr over yr. However the actual development story was beneath the floor of the headline quantity, as a result of income from the corporate’s cloud reminiscence phase (the place it accounts for information heart HBM gross sales) doubled to $5.3 billion.

Since Micron is experiencing a lot demand for its chips, it had unimaginable pricing energy throughout Q1, which led to improved revenue margins throughout its whole enterprise. Because of this, the corporate generated earnings of $4.60 per share, which was a whopping 175% soar from the year-ago interval.

Micron’s momentum remains to be choosing up steam. In line with its newest steerage, the corporate expects to generate $18.7 billion in income throughout the present fiscal 2026 second quarter (which ends Feb. 28, 2026), representing a rise of 132% yr over yr. In different phrases, Micron’s top-line development charge is poised to greater than double from Q1.

The corporate additionally anticipates a blockbuster bottom-line lead to Q2, with earnings of $8.19 per share doubtlessly within the playing cards. That will be a mind-blowing 480% enhance yr over yr.

Out of the 43 analysts tracked by The Wall Avenue Journal, 30 have given Micron inventory a purchase ranking. 9 others are within the chubby (bullish) camp, whereas three suggest holding. Though one analyst has given the inventory an underweight (bearish) ranking, none suggest outright promoting.

The analysts have a median value goal of $308.11, suggesting that the inventory may climb by 16% over the subsequent 12 to 18 months. Nevertheless, the Avenue-high goal of $500 implies a fair larger potential return of 88%.

I feel each of these targets are reasonable as a result of Micron inventory seems to be like a discount proper now, regardless of tripling in worth thus far in 2025. Based mostly on the corporate’s trailing 12-month earnings of $10.52 per share, its inventory is buying and selling at a price-to-earnings (P/E) ratio of simply 25.2. Which means it is considerably cheaper than Nvidia inventory, which trades at a P/E ratio of 44.8 as I write this.

As I highlighted earlier, Nvidia makes use of Micron’s information heart HBM options in its newest GPUs, so if you happen to count on Nvidia to proceed promoting truckloads of chips (which is probably going), then it is solely logical to be extraordinarily bullish on Micron’s enterprise as nicely.

I would not suggest promoting Nvidia inventory, as a result of it additionally seems to be engaging proper now. However Micron inventory could possibly be a fair higher means for traders to play the AI increase in 2026 from a worth perspective.

Before you purchase inventory in Micron Know-how, take into account this:

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Anthony Di Pizio has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Superior Micro Units and Nvidia. The Motley Idiot has a disclosure coverage.

Nvidia Inventory Is Up 31% in 2025, However Here is One other Tremendous Semiconductor Inventory to Purchase in 2026, In line with Wall Avenue was initially printed by The Motley Idiot