This Dark-Horse AI Stock Has Doubled Since April, and It Still Looks Like a Buy

Core Viewpoint - Micron Technology is identified as an undervalued stock in the AI sector, having doubled since the market dip in April, and is positioned to benefit from the ongoing AI boom [1][10]. Company Performance - In the fiscal third quarter, Micron's revenue increased by 37% to $9.3 billion, with gross profit nearly doubling from $1.83 billion to $3.5 billion, leading to a gross margin expansion from 26.9% to 37.7% [5][6]. - High-bandwidth memory (HBM) revenue grew nearly 50% sequentially, and data center revenue more than doubled year-over-year, contributing to a record quarterly revenue for DRAM [6][8]. - Adjusted earnings per share (EPS) rose from $0.30 to $1.68, with operating margin increasing from 10.6% to 23.3% year-over-year [7][8]. Market Position and Valuation - Following the earnings report, Micron trades at a forward P/E of about 16, which is significantly lower than the S&P 500 and its chip stock peers, indicating a potential buying opportunity [9][10]. - Analysts forecast continued earnings growth, projecting adjusted EPS of $12 for the next fiscal year [9]. Strategic Importance - Micron is the only manufacturer of advanced memory chips in the U.S. and has received $6.2 billion to build new plants, highlighting its strategic importance in the semiconductor industry [11]. - The company has a strengthening relationship with Nvidia, its largest customer, which could further enhance its market position [11][12]. Future Outlook - The ongoing growth in AI is expected to drive Micron's growth for the foreseeable future, despite potential cyclical rotations in the semiconductor industry [12].