Investors might want to look beyond Nvidia and explore semiconductor stocks that have solid AI fundamentals and attractive valuations.
The AI revolution is reshaping many sectors of the global economy. Nvidia, as a key player in this transformation, continues to be a favorite among investors. The company leads in accelerated computing, providing the hardware and software essential for much of today’s AI infrastructure.
Nvidia’s stock has surged over 43% in 2025, reflecting rising demand for its Blackwell architecture systems and software solutions. Yet, even with this momentum, future growth may be more limited. A lot of optimistic expectations are already factored into the stock price, which values the company at around $4.6 trillion and trades at nearly 30 times its expected earnings.
Meanwhile, semiconductor giant Micron has seen its stock climb nearly 128% this year, showcasing increasing confidence in its high-bandwidth memory and data center products. Analysts believe that Micron might deliver even greater returns in 2026, riding the same AI wave. Here’s some rationale:
Addressing Customer Concentration Risks
There are concerns about Nvidia’s revenue being concentrated among a small number of customers. In the second quarter of fiscal 2026, just two customers made up 39% of its revenue, and four accounted for 46%. Many of these clients are developing their own chips, which could make them less dependent on Nvidia in the future.
Micron, on the other hand, enjoys a far more diversified revenue base. Its largest customer generated only 17% of its total revenue, with the second largest at 10% for fiscal 2025. Over the last three years, half of Micron’s revenue came from its top ten customers, spanning data center, mobile, PC, automotive, and industrial markets.
This diversification likely makes Micron more resilient compared to Nvidia.
Demand for High-Bandwidth Memory and AI Leadership
Micron’s high-bandwidth memory (HBM) products are valued for their superior data transfer speeds and energy efficiency, increasingly utilized in data centers. HBM revenue is expected to approach $2 billion in the fourth quarter of 2025, equating to an annual rate of around $8 billion.
The company anticipates that its HBM market share will match its overall DRAM share by the third fiscal quarter of 2025. Currently, it serves six HBM customers and has pricing agreements for most of its 2026 HBM3E product supply.
Micron has also started testing its HBM4 products with customers and expects mass production to begin by the second quarter of 2026, with broader distribution later that year.
In addition, Micron’s low-power double data rate (LPDDR) memory products are anticipated to see strong demand in data centers, which have become a significant driver of growth, contributing 56% of the company’s sales in fiscal 2025.
Overall, Micron looks well-positioned to tap into the increasing demand for AI-related memory in the years ahead.
Assessment
Micron seems to present a more appealing risk-reward scenario than Nvidia, especially as investments in AI infrastructure grow. Currently, it trades at 12.3 times forward earnings, quite a bit lower than Nvidia’s valuation. While Nvidia’s premiums already presume flawless execution and ongoing leadership, Micron still behaves like a cyclical memory stock. There’s room for valuation expansion given Micron’s improving revenue mix from high-margin AI memory products.
Market sentiment is also turning favorable for Micron. Morgan Stanley’s Joseph Moore upgraded the stock from neutral to overweight, increasing his price target from $160 to $220. UBS has reiterated a “buy” rating, raising its target from $195 to $225. Itau Unibanco has started coverage on Micron with a buy rating and a $249 price target.
Analysts forecast nearly a 100% increase in Micron’s earnings per share to $16.6 in fiscal 2026. If current multiples hold, this could bring its stock price to around $204, suggesting limited downside. However, a modest multiple expansion into the range of 14 to 16 times forward P/E could push the stock price to between $232 and $265, presenting an upside of 20% to nearly 38%.
Conversely, Nvidia might face a scenario where its valuation compresses, limiting growth potential. With better customer diversification, a growing footprint in AI, and a more realistic valuation, Micron could emerge as the more attractive semiconductor option in 2026.
