Is Micron Stock Really Any Match for Nvidia?

Nvidia has been absolutely dominating the AI conversation this year, and for good reason. Its stock price has jumped by a stunning 130% year-to-date. But Nvidia isn’t the only game in town. Although its year-to-date stock gain has only been around 29%, Micron Technology may be poised for rapid acceleration. Both stocks are solid options for investors, but which should you choose? Let’s dive deeper into both companies.

The Case for Micron (NASDAQ: MU)

Micron’s offering in the AI market is its high-bandwidth memory (HBM) semiconductors. Ironically, the company has a contract to provide its HBM3E chips for Nvidia’s next-generation H200 graphics processing units. So if Micron explodes in growth, it will partially have Nvidia to thank.

Micron is doing quite well this year. For the third quarter of fiscal 2024, the company posted a shocking 81% YOY revenue increase. It’s already sold out its entire HBM production capacity for 2024 and 2025. Yet the company continues to innovate, pushing the limits of technology to create even more power efficient HBM chips. The HBM market as a whole is expected to rise to nearly $86 billion in revenue by 2030, representing a stunning compound annual growth rate of 68%.

Yet right now, Micron stock is still relatively cheap. It’s trading at just 13 times forward earnings. This represents a real opportunity for those who want to ride the wave.

The Case for Nvidia (NASDAQ: NVDA)

Of course, Nvidia’s strength is undeniable. The company holds a near-monopoly on AI data center graphics processing units (GPUs), with a market share of over 90%. It also owns the AI Foundry, where customers such as Uber and Accenture can build their own custom generative AI models. Nvidia is attracting government customers as well, with about $10 billion in government-related revenue for 2024. In short, there is no reason to believe that Nvidia’s incredible growth trajectory will slow down anytime soon.

However, Nvidia is expensive. At some point, it will run out of available upside. Not to mention that the current share pricing of 47 times forward earnings may place it out of reach for some investors.

There is no right or wrong between Micron and Nvidia. The partnership between the two companies actually helps to ensure that when one grows, so does the other. Which you pick will largely depend on your personal circumstances, including your budget and investment goals.

Neither Lisa Fritscher nor Stocks.News have positions in this company.