Important points
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Micron’s valuation is surprisingly low given its rapid growth as customers compete for memory hardware.
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Broadcom is serving the custom chip market as companies move away from expensive generic solutions.
technology driven Nasdaq-100 index We achieved solid growth of 20% in 2025, mainly due to continued optimism. generative artificial intelligence (AI). This fast-growing industry is far from profitable. In fact, early leaders like OpenAI and Anthropic are spending billions of dollars every quarter, much of that money on large language model (LLM) Yes.
Looking ahead to 2026, investors should continue to focus on select aspects of AI by betting on hardware companies that enable the technology. Let’s discuss why micron technology(NASDAQ:MU) and broadcom(NASDAQ:AVGO) Might be one of the best buys.
Where to invest $1,000 now? Our team of analysts has revealed what they believe. Best 10 stocks Buy now. Continued “
micron technology
With its stock up nearly 400% over the past 12 months, Micron Technology is finally seeing some sunshine after decades of lackluster performance. But despite the growth, Micron stock remains an attractive value given how rapidly generative AI data center demand is transforming the company’s high-bandwidth memory hardware market.
Since its founding in the late 1970s, Micron has grown to become a leader in the design and manufacture of computer memory chips, such as DRAM and NAND flash, used to store data in everything from smartphones to automotive systems. Also considering memory chips commoditizedThis means that producers have difficulty differentiating themselves from each other in terms other than price. This dynamic creates intense competition and generally lower profit margins.
But generative AI promises to change things, at least in the short term. Analysts at Mizuho Financial Group say prices for NAND memory could soar 330% in 2026 and 50% in 2027 from a year ago as cloud computing giants race to build data centers.
But while Wall Street has become increasingly optimistic about Micron’s future, the stock’s valuation has yet to catch up. At a forward price-to-earnings ratio of just 13 times, the company’s stock trades at a significant discount to its share price. S&P500 The average index is 22.
broadcom
Memory hardware is essential to building an AI datacenter, but perhaps the most important components are: graphics processing unit (GPU) and AI accelerators. These are the chips that actually train and run the LLM. Currently, the industry is dominated by NvidiaBut Broadcom is quickly gaining ground as companies increasingly choose its custom chips over one-size-fits-all solutions.
Broadcom and Nvidia are both semiconductor companies, but their business models are fundamentally different. Nvidia focuses on designing chips and outsourcing manufacturing to other companies, while Broadcom manufactures custom chips designed by other companies. These custom chips, called application-specific integrated circuits, can offer significant cost and efficiency savings.
Broadcom is attracting major customers. In September, Reuters reported that industry leaders OpenAI is partnering with the company to develop a custom AI chip, which is expected to be released this year.
Image source: Getty Images
In the long term, custom chips probably have a brighter future than general-purpose GPUs, as they offer AI companies more control over the supply chain and the potential for cost savings. Given the widespread losses on the software side of the industry, companies will have a strong incentive to improve efficiency wherever possible.
Broadcom’s forward P/E ratio is 33 times, trading at a premium to the market average. That said, this valuation makes sense when you consider the growth opportunities. Fourth-quarter revenue increased 28% year-over-year to $18.0 billion, driven by a surge in AI semiconductor revenue, and 74% year-over-year to $6.5 billion.
Which stocks are good for you?
Both Micron Technologies and Broadcom are great ways to get exposure to generative AI opportunities, but Micron looks like a much stronger choice. The computer memory giant’s lowest valuation suggests it is still largely unknown to the market. And with the global memory hardware shortage expected to continue beyond 2026, the company looks poised for explosive growth in the short term.
Should you buy Micron Technology stock now?
Before buying Micron Technology stock, consider the following:
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Will Ebifang has no position in any stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
