Why Micron Technology (MU) Could Outperform Nvidia (NVDA) as AI Infrastructure Spending Accelerates

The artificial intelligence revolution is no longer a distant promise but a present-day reality, reshaping industries from healthcare to manufacturing. Yet, while the spotlight often shines on companies like Nvidia (NVDA), whose GPUs power AI training and inference, the true backbone of this transformation lies in the under-the-radar enablers: the semiconductor firms supplying the memory and storage that make AI workloads possible. Among these, Micron Technology (MU) stands out as a critical, yet undervalued, player. As AI infrastructure spending accelerates, Micron's strategic position in high-bandwidth memory (HBM) and its expanding partnerships could position it to outperform even the most celebrated names in the sector.

The Invisible Engine of AI: Memory and Storage

AI's insatiable demand for data processing hinges on two pillars: computational power and memory bandwidth. While Nvidia's Blackwell GPUs dominate headlines for their raw processing capabilities, they are rendered ineffective without the high-speed memory to feed them. Micron's HBM3E, with its 1.2TB/s bandwidth and 36GB capacity, is the linchpin of modern AI training. By 2025, HBM3E had already sold out of production capacity, with demand extending into 2026. The company's upcoming HBM4, offering 60% better performance and 20% improved power efficiency, is set to enter volume production in 2026, further cementing its leadership.

Nvidia, for all its dominance, relies on Micron for its HBM supply. The Blackwell GB200, a cornerstone of Nvidia's AI strategy, depends on Micron's HBM3E for its memory needs. This symbiotic relationship highlights a critical asymmetry: while Nvidia captures the lion's share of the AI chip market, Micron's memory solutions are the unsung enablers of AI's scalability.

Strategic Partnerships and Market Position

Micron's partnerships with industry leaders like AMD and Samsung underscore its pivotal role. For instance, its HBM3E is integrated into AMD's Instinct MI350 GPU, while its LPDDR5X and UFS 4.0 solutions power Samsung's Galaxy S25 series, enabling on-device AI features like real-time translation and generative imaging. These collaborations are not mere transactions but strategic alliances that position Micron at the intersection of data centers, smartphones, and edge devices.

In contrast, Nvidia's partnerships, though extensive, are often with cloud providers and automakers, focusing on end-user applications rather than the foundational infrastructure. While this broadens Nvidia's reach, it also exposes it to market volatility in sectors like automotive, where adoption cycles are longer and margins thinner. Micron, by contrast, is embedded in the core of AI infrastructure, where demand is more inelastic and growth more predictable.

Financials and Valuation: A Tale of Two Margins

Micron's financial performance in 2025 reflects its strategic focus. Q3 2025 revenue hit $9.3 billion, with HBM contributing an annualized $6 billion. Gross margins expanded to 39%, with guidance pointing to 44.5% in Q4 2025. This margin expansion is driven by the shift toward high-margin HBM and disciplined cost management. Meanwhile, Nvidia's Q4 2025 revenue surged to $39.3 billion, but its gross margins (75.5%) are inflated by its software ecosystem and high pricing power in the GPU market.

Micron's valuation remains compelling. At a forward P/E of 14.5 and P/S of 3.5, it trades at a discount to the S&P 500 averages. Analysts project a 24.81% upside, with a high target of $200.00. By contrast, Nvidia's valuation, while justified by its dominance, is increasingly stretched, with a P/E of 50+ and a P/S of 10. This disparity suggests that Micron's role as an enabler is underappreciated by the market.

The HBM4 Catalyst: A Game Changer

The real inflection point for Micron lies in HBM4. With its 60% performance boost and 20% power efficiency gains, HBM4 will be indispensable for next-generation AI models, including agentic and multimodal systems. Micron's early mover advantage—sampling HBM4 to key customers in 2025—positions it to capture a larger share of the HBM market, projected to grow from $16 billion in 2025 to $30 billion by 2027.

Nvidia, despite its Blackwell roadmap, cannot replicate this advantage. Its reliance on Micron for HBM means that any bottlenecks in Micron's production could delay its own product cycles. This interdependence creates a unique edge for Micron, where its success is less tied to the whims of a single partner and more to the structural demand for memory in AI.

Investment Implications

For investors, the case for Micron is clear. Its role in the AI infrastructure stack is both critical and undervalued. While Nvidia's revenue growth is impressive, it is increasingly dependent on Micron's ability to supply the memory that powers its GPUs. Micron's financial discipline, expanding margins, and strategic roadmap—anchored by HBM4—position it to outperform in the long term.

The risks, of course, are not negligible. Memory markets are cyclical, and a slowdown in AI adoption could impact demand. However, the structural shift toward AI is too profound to reverse. As AI models grow in complexity, the need for high-bandwidth memory will only intensify, making Micron's offerings indispensable.

In conclusion, while Nvidia remains the poster child of the AI revolution, Micron is the unsung hero. For investors seeking to capitalize on the next phase of AI infrastructure spending, Micron offers a compelling, under-the-radar opportunity. Its ability to outperform Nvidia may not be a question of if, but when.