Micron vs. Palantir: Which AI Stock Is the Better Buy for 2026?

Core Insights - Micron Technology, Inc. (MU) has seen its stock price triple in 2025 due to the demand for high-bandwidth memory (HBM) chips essential for AI infrastructure, while Palantir Technologies Inc. (PLTR) has experienced over 100% growth in the same period [1] - The ongoing question is whether both companies can maintain this momentum and which stock presents a better investment opportunity [1] Micron Technology - The demand for Micron's HBM chips is a significant driver of its recent strong quarterly performance and is expected to continue fueling growth due to limited supply amid rapid AI infrastructure expansion [1] - Micron projects fiscal second-quarter 2026 revenues between $18.3 billion and $19.1 billion, following a fiscal first-quarter 2026 revenue of $13.64 billion, marking a 56.8% year-over-year increase [2] - The company generated a record cash flow of $3.9 billion in fiscal first-quarter 2026, providing resources for growth initiatives [2] - Micron's forward price-to-earnings (P/E) ratio is 10.78, significantly lower than the Computer-Integrated Systems industry's average of 18.2, making it an attractive growth stock at a reasonable valuation [9] Palantir Technologies - Palantir's AI Platform (AIP) is being adopted by both U.S. government agencies and commercial clients, driving strong revenue growth [3] - The company expects fourth-quarter 2025 sales between $1.327 billion and $1.331 billion, with full-year 2025 revenues projected between $4.396 billion and $4.400 billion [4] - Palantir reported revenues of $1.18 billion in the third quarter of 2025, representing a 63% increase year-over-year and an 18% sequential rise [4] - Palantir's CEO highlighted a Rule of 40 score of 114%, indicating strong scalability [5] - However, Palantir's forward P/E ratio of 172.08 is significantly higher than the Internet-Software industry's average of 32.42, indicating elevated market expectations and potential risks if growth slows [7] Comparative Analysis - Micron's shares are expected to rise due to strong HBM chip demand and a solid customer base, while Palantir's growth is driven by the increasing popularity of its AIP [6] - Micron trades at a lower forward valuation compared to Palantir, which has higher expectations and greater downside risk [8] - Currently, Micron holds a Zacks Rank 1 (Strong Buy), while Palantir has a Zacks Rank 3 (Hold) [10]