The Most Undervalued Chip Stock to Own in 2026

Core Viewpoint - The memory shortage is expected to persist until 2027, creating significant opportunities for semiconductor companies, particularly Micron Technology, which is currently undervalued compared to its peers despite strong growth prospects [1][9]. Industry Overview - There is a notable mispricing in the semiconductor industry, with investors favoring companies like Nvidia with higher P/E ratios, while undervaluing Micron Technology despite its faster earnings growth [2][4]. - The cyclical nature of the memory market contributes to Micron's lower valuation, but the demand for memory in AI chips is driving substantial growth for the company [3][5]. Company Performance - Micron's shares are trading at a forward P/E of 11, significantly lower than Nvidia's 24 and AMD's 35, indicating an attractive valuation [4]. - Wall Street analysts forecast Micron's earnings to grow at an annualized rate of 50% over the next few years, surpassing AMD's 45% and Nvidia's 36% [5]. - Earnings are projected to surge 294% this year to $32.67 per share, followed by a 27% increase next year to $41.54 per share, driven by rising memory prices and demand for GPUs [6][7]. Market Dynamics - Revenue for Micron increased by 57% year over year last quarter, with earnings rising by 175%, indicating strong momentum [7]. - The memory shortage is expected to be exacerbated by Nvidia's upcoming Rubin chips, which will require higher memory bandwidth, benefiting Micron [9]. Future Outlook - The current demand for advanced memory products appears sustainable, with management indicating strong customer commitments for high-bandwidth memory through 2026 [10]. - The low valuation of Micron relative to its earnings suggests potential for further upside in the coming years [10].