Nvidia’s “Secret Supplier” is Drawing Major Investments from Wall Street Elite

Forget Nvidia for a moment (yes, I'm being cheeky). How can you ignore a stock that’s done the stock market equivalent of running a marathon in under two hours? Nvidia's meteoric rise has left it with a whopping $3 trillion market cap, claiming a hefty slice of the S&P 500. And yes, their chips are basically the brains behind AI, which is a pretty big deal.

But let’s be real: Nvidia’s stock has gotten pricier than a Miami condo. 

Its dazzling performance has made it a bit of a splurge, even if you’re looking a couple of years down the road. So, what can you do? Look elsewhere in the chipmaker universe, where there are other promising stars shining bright.

Enter Micron Technology (NASDAQ: MU). Analysts are practically singing its praises louder than a contestant on "The Voice." Let’s take a deep dive into the stock and see why this dark horse might just be your next golden ticket.

Micron: Riding the AI Wave

Nvidia's GPUs might be the rockstars of AI development, but even rockstars need a backing band.

In this case, memory chips play the crucial role of storing and recalling data at lightning speed, and Micron's got the best in the biz. Their high-bandwidth memory (HBM3E, if you’re into acronyms) is leading the charge in data centers. Think of it as the Usain Bolt of memory chips—faster, more efficient, and using less energy than its predecessors.

Micron’s HBM3E is so stellar that Nvidia itself uses it in its latest GPUs, like the new H200, which can chomp through AI models like a competitive eater at a hotdog contest. 

In the last fiscal quarter, Micron’s data center solutions raked in $100 million, and they're expecting that number to balloon to several billions by the end of next year. With their products sold out through 2025, Micron’s dance card is full.

AI isn’t just beefing up data centers; it’s also turning personal computers and smartphones into memory hogs. Micron’s DRAM chips are doubling down on capacity, and with AI-enabled gadgets needing up to twice the memory of their predecessors, Micron’s cash registers are primed to sing.

Show Me the Money: Micron’s Revenue Surge

Micron’s Q3 revenue was a cool $6.8 billion, up 81% year-over-year. That’s not just growth; that’s growth on steroids. Their data center business alone saw an 85% spike, while their mobile segment wasn’t far behind with a 94% jump. Essentially, everyone from data centers to smartphone makers is knocking on Micron’s door, begging for more memory chips.

Even more impressive, Micron swung from a loss of $1.73 per share last year to earnings of $0.30 per share this quarter. And their supply constraints? Those are working in their favor, allowing them to charge premium prices. It’s a classic case of high demand meets limited supply, and Micron is cashing in.

The Wall Street Stamp of Approval

Micron’s stock has soared 59% this year, and Wall Street is still bullish. Of the 38 analysts covering the stock, 27 have given it the highest buy rating, with the rest leaning towards overweight or hold. Even the few who are bearish aren’t outright recommending selling.

Micron’s fiscal year wraps up in August, and while early-year inventory gluts have been a hiccup, analysts are already looking forward to 2025 with high hopes. They’re predicting $9.06 in earnings per share, placing Micron at a forward P/E ratio of 15.7. Compare that to the semiconductor ETF’s 35.9 and Nvidia’s 46.6, and Micron looks like a bargain.

Given Micron’s key role in Nvidia’s latest tech, any investor bullish on Nvidia should seriously consider adding Micron to their portfolio. It’s like getting a backstage pass to the concert—if the band does well, so does the roadie.

Paul Tudor Jones Joins the Party

Billionaire investor Paul Tudor Jones, famous for predicting the 1987 market crash, has thrown his hat into the Micron ring. In his Q1 2024 filings, Jones revealed a new position in Micron. The memory chip business is notoriously volatile, but Jones is betting big on the surge in AI-driven demand for memory chips.

(Source: Bloomberg)

Micron’s partnership with Nvidia, especially around their HBM tech for the H200 GPUs, has likely fueled this move. With Jones on board, it’s clear that Micron’s star is on the rise.

So, while Nvidia might continue being the superstar grabbing all the headlines, if you’re looking for a good chip stock to capitalize on without paying an arm and a leg, give Micron a closer look. It’s got the tech, the demand, and now the heavyweight investors backing it.

Stocks.News does not have positions in companies mentioned.