2 Undervalued AI Powerhouses to Buy in 2026 and Hold for Decades

The artificial intelligence (AI) revolution is reshaping global technology infrastructure, creating unprecedented demand for specialized hardware and memory solutions. Two companies-Micron Technology and Alphabet-are emerging as critical players in this transformation, yet their valuations suggest untapped potential for patient investors. By analyzing their strategic initiatives, financial performance, and industry positioning, this article argues that both firms offer compelling long-term opportunities in the AI-driven economy.

Micron Technology: The Memory Engine Behind AI's Future

Micron Technology (NASDAQ: MU) has redefined its role in the AI ecosystem through aggressive innovation in high-bandwidth memory (HBM) and NAND technologies. In FY 2024, the company reported revenue of $25.11 billion, a 61.59% year-over-year increase, driven by surging demand for AI servers and data centers. Its R&D investment of $3.43 billion in 2024 underscores a commitment to staying ahead of the curve, with products like HBM3E and G9 NAND already meeting the needs of next-generation AI workloads.

Micron's gross margins have expanded dramatically, rising from 22% in FY 2024 to over 50% in recent reporting periods, reflecting its ability to command premium pricing in a constrained supply environment. The company is also accelerating domestic manufacturing, with a Boise, Idaho facility prioritized to address immediate AI memory demand. Meanwhile, its roadmap includes HBM4, which promises to outperform industry standards in speed and bandwidth, further solidifying its leadership in AI infrastructure.

Valuation metrics suggest Micron is undervalued relative to peers. Its EV/EBITDA ratio of 11.63x in late 2025 is below the semiconductor industry average of 13.5x, while its P/E ratio of 22–26.1x lags behind competitors like Advanced Micro Devices (124.8) and Intel (130). Analysts argue that Micron's fair P/E ratio should be closer to 47.3x, indicating a significant discount to intrinsic value. For investors seeking exposure to the AI memory boom, Micron's combination of innovation, margin expansion, and undervaluation makes it a standout play.

Alphabet: The Full-Stack AI Infrastructure Giant

Alphabet (GOOGL) is leveraging its vast resources to dominate the AI infrastructure landscape, with Google Cloud emerging as a key growth engine. In Q3 2025, the company reported revenue exceeding $100 billion, driven by a 34% year-over-year increase in Google Cloud revenue to $15.2 billion. The cloud segment's operating margin rose to 23.7%, reflecting improved efficiency and pricing power. Alphabet's capital expenditures also surged, with 2025 spending reaching $93 billion and projected to jump to $114 billion in 2026, underscoring its commitment to scaling AI and cloud operations.

Alphabet's AI innovations are equally transformative. The Gemini platform processes 7 billion tokens per minute, while the upcoming Ironwood TPU is designed to meet the computational demands of large language models. Strategic partnerships, such as the collaboration with Oracle to deploy AI models via cloud services, further expand its ecosystem. Meanwhile, consumer-facing AI features like AI Overviews (used by 2 billion users) and AI Mode (75 million daily active users) demonstrate Alphabet's ability to monetize AI across touchpoints.

Despite its growth, Alphabet's valuation appears reasonable. Its trailing P/E of 30.8x and forward P/E of 28.25x are elevated but justified by its AI-driven revenue streams. The company's EV/EBITDA of 25.1x is higher than historical averages, yet its P/S ratio of 9.9x-far above the Communication Services industry average of 1.1x-reflects investor confidence in its long-term potential. Analysts like Jefferies and Wolfe Research have raised price targets to $365 and $380, respectively, maintaining "Buy" and "Outperform" ratings. While regulatory risks persist, Alphabet's diversified revenue base in advertising and YouTube provides a buffer against volatility.

The Case for Long-Term Ownership

Both Micron and Alphabet are positioned to benefit from the multi-decade AI cycle, but their valuations suggest they are not yet fully priced for their potential. Micron's undervaluation relative to peers and its leadership in AI memory make it an attractive entry point for investors seeking hardware exposure. Alphabet, meanwhile, offers a "full-stack" AI strategy-from cloud infrastructure to consumer applications-that aligns with the sector's long-term trajectory.

For patient investors, these companies represent more than short-term growth-they are foundational to the AI economy. As demand for AI infrastructure accelerates, Micron's memory innovations and Alphabet's ecosystem dominance will likely drive outsized returns over the next decade.