Nvidia Is Surging, but Wall Street Sees Micron Stock as a Better AI Play

Nvidia in 2025 is doing what it knows best, which is soaring higher. Yet, with the year coming to an end, Wall Street is subtly directing attention to a different semiconductor name that has not only entered the AI frenzy, but is also possibly getting ready to take some of the limelight in 2026.

Nvidia’s Great Year, but a Bigger Rival

NVIDIA’s stock has increased approximately 31% in 2025, which is fueled by the limitless demand for its data center GPUs that is the basis of modern artificial intelligence development. The firm’s chips are so scarce that the demand is still higher than the amount being produced, which makes it a ride up for both revenue and earnings.

However, even with such remarkable success, Nvidia has been outperformed by Micron Technology, whose shares have remarkably increased by 229% this year.

Micron is the maker of the memory and storage chips that are mostly needed in AI applications for data centers, PCs and smartphones. It has become a favorite of Wall Street.

Analysts no longer see the company as a minor player who is benefiting from AI, instead it is seen as a major one in the hardware that makes high-performance computing possible.

Nvidia Relies on Micron More

High-bandwidth memory has turned out to be a key factor for GPU makers in getting the highest performance, and this is specifically for data-intensive AI tasks, where a lot of data is constantly being processed.

The output of even the fastest processors can become much lower if the right amount of fast memory is not there, which makes it necessary for the processor to wait, this then results in costly holdups. Micron’s HBM3E products are getting this issue tackled directly by offering much larger capacity and better energy efficiency than the solutions of its competitors.

This is not going unrecognized. Both Nvidia and AMD have used Micron’s memory in their latest GPUs, which ultimately strengthens Micron’s position at the center of the AI supply chain. Micron’s next-generation HBM4E memory, which is capable of both innovation and raising the bar even higher, is next in line for production increase.

Moreover, the company has already announced its entire 2026 output as sold out, which reveals how the market has become.

The Company’s Demand for AI is Beyond Data Centers

Datacenters are still the largest contributor to Micron’s growth, but the trend of AI consumption and adoption is also impacting the other end of the market, which is the progression of it in consumer electronics. PC and smartphone manufacturers are adding more on-device AI features that necessitate larger memory footprints.

During Q1 of fiscal 2026 (ended in Nov. 27, 2025), 59% of high-end smartphones that were shipped were with a minimum of 12 gigabytes of memory, which is more than two times the figure from a year ago. The alternate path taken is significant.

It tells us that the reason for Micron’s growth is its multi-market trend of AI, which is not confined to one narrative, but is interconnected with markets that are all moving in the same direction.

Growth in Revenue & Earnings

Micron’s financial performance is a reflection of its momentum. Micron reported a record revenue of $13.6 billion in its fiscal first quarter, which is a 56% increase year over year. Also, the cloud memory revenue doubled, and reached to $5.3 billion, as the data center customers elevated purchases of the high-margin products.

The demand was quite strong that ultimately enabled the company to have the upper hand in pricing, which improved its margins and resulted in a whopping 175% increase in earnings as compared to the previous year.

The company is optimistic that the sales will continue to grow at an even higher rate than before in the current quarter, and it has projected a 132% increase in sales over the previous year’s sales figure. If this happens, it would bring an extraordinary growth in the earnings.

Reasonable Valuation

Even after the big price increase, Micron’s valuation is not so high as that to Nvidia. The price of the stock is around 25 times the earnings of the past year, which is still far below Nvidia’s ratio, even though both firms are very much connected through the AI ecosystem.

Most analysts seem to agree that this situation is not a problem, as almost all of them rate the stock as a ‘buy’ category, while none of them expresses a ‘sell’ recommendation.

Bottom Line

Though Nvidia is the main producer of AI semiconductors, and the majority of the customers will not debate regarding the company’s long-term strength, Micron gives a different approach. The investor gets the opportunity to be present in a strong trend, but at the same time the valuation is so low that there is still a chance of an upside.

As we get closer to 2026, we understand Wall Street’s message that sometimes the smartest AI investment is not the name that attracts the most attention, but is the one that is quietly providing the power for everything else.