The Case for Micron and AI-Driven Tech Bargains in 2026

The artificial intelligence (AI) revolution is reshaping global technology markets, creating both opportunities and challenges for investors. At the heart of this transformation lies the semiconductor industry, where memory and processing demands are surging to unprecedented levels. Among the beneficiaries, Micron Technology (MU) stands out as a prime example of an undervalued stock poised to capitalize on AI-driven growth. However, the broader semiconductor ecosystem also offers compelling bargains, including Applied Materials (AMAT) and Lam Research (LRCX), which are quietly positioned to profit from the AI monetization wave.

Micron: A Structural Winner in the AI Memory Supercycle

Micron's resurgence in 2025- marked by a 239% stock surge-was fueled by its dominance in high-bandwidth memory (HBM), a critical component for AI and high-performance computing (HPC) workloads. The company's Q1 FY 2026 results underscore its strength: revenues hit $13.64 billion, a 57% year-over-year increase, while non-GAAP operating income reached $6.4 billion, reflecting robust pricing power and margin expansion. Crucially, Micron's HBM3E and HBM4 products are fully booked for 2026 under long-term agreements, ensuring stable cash flows amid volatile memory markets.

Financial metrics further validate its undervaluation. Micron trades at a forward P/E of 7.1x, significantly below the S&P 500's 23.11x, and its gross margin expanded to 56.8% in Q1 FY 2026, driven by premium pricing for HBM. Analysts project earnings per share (EPS) could reach the mid-30s by FY2027, assuming sustained AI demand. Strategic investments, including a $20 billion 2026 capex plan and a pivot away from consumer memory to enterprise and data center markets, reinforce its long-term positioning.

Partnerships with AI leaders like NVIDIA and AMD are equally pivotal. These collaborations ensure Micron's HBM remains integral to cutting-edge AI accelerators, while innovations such as 1-gamma DRAM and G9 NAND address evolving performance and power efficiency needs. As AI models grow in complexity, Micron's role as a U.S.-based memory supplier with advanced R&D capabilities positions it to outperform peers in both demand and geopolitical resilience.

Beyond Micron: Undervalued Semiconductor Allies in the AI Ecosystem

While Micron dominates memory, other semiconductor players are quietly capturing AI-driven growth. Applied Materials (AMAT), for instance, trades at a forward P/E of 26.56x, below the industry average of 34.54x, and is benefiting from AI's impact on wafer fabrication. The company's Q4 2025 revenue, though down 3% year-over-year, was offset by strong earnings and a bullish outlook for 2026, with AI-driven wafer fab equipment (WFE) sales expected to grow at double-digit rates. Applied Materials' role in advanced manufacturing and ICAPS technologies makes it a critical enabler of AI infrastructure.

Lam Research (LRCX) is another undervalued gem. Its Q1 FY 2026 revenue surged 27.7% year-over-year to $5.32 billion, driven by demand for equipment in HBM production. Analysts project over 50% growth in AI semiconductor sales in 2026, with Lam's expertise in vertical stacking and advanced memory technologies placing it at the forefront of this trend.

Industry Validation and Structural Trends

The semiconductor industry's trajectory is underpinned by structural demand. The HBM market, valued at $35 billion in 2025, is projected to expand to $100 billion by 2028, with Micron capturing 21% of this growth. Meanwhile, the broader semiconductor sector is on track to reach $1 trillion in sales by 2026, driven by AI infrastructure, data centers, and edge computing.

Nvidia and Broadcom remain dominant in AI accelerators and networking, but their supply chains rely on enablers like Micron, Applied Materials, and Lam Research. For example, Broadcom's custom AI accelerators and high-speed Ethernet solutions are complemented by Micron's memory innovations, while Applied Materials' equipment is essential for manufacturing the silicon layers required for HBM.

Conclusion: A Portfolio of Resilience and Growth

Investors seeking exposure to the AI monetization wave should prioritize companies with both technical differentiation and financial discipline. Micron's leadership in HBM, coupled with its low valuation and strategic clarity, makes it a standout. Applied Materials and Lam Research, meanwhile, offer complementary exposure to the manufacturing and equipment layers of the AI supply chain. Together, these stocks represent a diversified bet on the structural shift toward AI-driven computing-a shift that is only beginning to unfold.

As the industry navigates macroeconomic uncertainties, the semiconductor sector's resilience-rooted in its role as the backbone of AI-provides a compelling case for long-term investment. For those willing to look beyond short-term volatility, the bargains of 2026 may well define the decade ahead.