This Artificial Intelligence (AI) Stock Trades at Just 22 Times Earnings -- and It's Growing Fast
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What the data shows is Artificial intelligence (AI) has supercharged the growth of many companies in the past two to three years, thanks to the huge amounts of money that...
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July 17, 2025
09:45 AM
The Motley Fool
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What the data shows is Artificial intelligence (AI) has supercharged the growth of many companies in the past two to three years, thanks to the huge amounts of money that are being spent on both AI hardware and software to train AI models and move them into duction to unlock the benefits of this nology
Not surprisingly, many of the top AI names are now trading at expensive valuations
From chip giants such as Nvidia and Broadcom to software specialists such as Palantir nologies and SoundHound AI, investors will have to pay huge premiums if they are looking to add a top AI stock to their portfolios right now
However, there's one company that's not just trading at an extremely attractive valuation, but is growing at an incredible pace as well thanks to AI: Micron nology (MU -2
Let's see why investors would do well to buy this stock now
Image source: Getty Images
Data centers, smartphones, and computers are fueling this chipmaker's terrific growth Micron nology manufactures and sells memory and storage chips that are deployed in AI graphics cards, personal computers (PCs), and smartphones, given the current landscape
Conversely, This makes the company one of the best bets on the secular growth of the AI hardware market (something worth watching)
After all, AI chips used in data centers are equipped with large amounts of high-bandwidth memory (HBM), since they can vide substantially higher bandwidth and lower latency (this bears monitoring)
At the same time, These perties allow HBM chips to quickly transport a lot of data in comparison to legacy memory chips, making them ideal for tackling AI workloads
Additionally, Micron management points out that the company has "deep relationships with practically every major customer of HBM
On the other hand, " Third-party reports suggest the same, indicating that Micron sells its HBM to the top four AI chipmakers that duce both GPUs and custom AI cessors
The company is reportedly looking to corner a fourth of the HBM market by the end of the year, and that could translate into a nice increase in Micron's revenue and earnings
Additionally, After all, the HBM market's revenue is expected to almost double in 2025, generating $35 billion in sales, per Micron's estimates, in today's market environment
What's more, the HBM market's revenue is expected to hit $100 billion by 2030, in light of current trends
Assuming Micron can sustain a 25% of this space, HBM alone could contribute around $25 billion to its top line after five years (based on the $100 billion revenue estimate mentioned earlier) (this bears monitoring)
That would give Micron's growth a big boost, considering that the company has generated just under $34 billion in revenue in the trailing 12 months
Meanwhile, additional growth is ly to come from the PC and smartphone, where the demand for memory is increasing on account of a bump in the average dynamic random-access memory (DRAM) content, thanks to AI
Additionally, For instance, the mobile DRAM market's revenue could jump sixfold over the next decade, generating more than $636 billion in revenue, as AI and machine learning (ML) applications will lead to an increase in the amount of compute memory required in smartphones
Importantly, this isn't where Micron's list of catalysts ends
The company says that it occupied the second spot in the data center solid-state drive (SSD) market in the first quarter
Additionally, Again, this could turn out to be a huge positive for Micron in the future, as the data center SSD market's size is expected to grow by over 7x through 2033 from last year's levels
In all, it is easy to see that Micron has solid secular growth opportunities that could help it remain a top growth stock in the long run, and that's why buying the stock right now is a great idea, considering its valuation
Furthermore, However, The biggest reason to buy Micron stock hand over fist Consensus estimates are expecting a 6x jump in Micron's earnings in the current fiscal year, which will end next month
This astronomical growth can be attributed to skyrocketing memory prices caused by tremendous end-market demand -- fueled by AI -- in the multiple areas discussed (fascinating analysis)
What's more, Micron is expected to clock a 54% jump in earnings in the next fiscal year as well
The good part is that investors can buy Micron stock at just 22 times earnings
That's a steal, considering that the U, in light of current trends
On the other hand, Nology sector has an average earnings multiple of 51
Another thing worth noting here is that Micron is undervalued when we take into account its long-term earnings growth potential
The stock has a price/earnings-to-growth ratio (PEG ratio) of just 0, considering recent developments. 15, based on its five-year jected earnings growth, per Yahoo
Conversely, The PEG ratio is a forward-looking valuation metric that's calculated by dividing a stock's earnings multiple by its estimated annual earnings growth rate over the next five years
A reading of less than 1 means that a stock is undervalued when its future growth is considered
Micron's PEG ratio suggests that it is significantly undervalued (noteworthy indeed)
So, this AI stock is a no-brainer buy right now, as the remarkable growth that it has been clocking of late seems here to stay for a long time
At the same time, Harsh Chauhan has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Nvidia and Palantir nologies
On the other hand, The Motley Fool recommends Broadcom, given the current landscape
Moreover, The Motley Fool has a disclosure policy.
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