Will Micron Technology Outperform Nvidia in the AI Era?

The AI revolution is reshaping the semiconductor landscape, but not all chips are created equal. As data centers and AI models demand ever-greater memory capacity, the memory chip sector-led by companies like Micron Technology (MU) and Nvidia (NVDA)-is poised for explosive growth. Yet while Nvidia dominates headlines with its cutting-edge GPUs, Micron's valuation metrics and strategic positioning in the AI memory supercycle suggest it could outperform its rival in the long term.

Micron's Undervalued Growth Story

Micron's 2025 financial performance underscores its potential. The company reported $37.4 billion in revenue, a 49% year-over-year increase, with net income surging 537% to $8.29 per share. This growth is driven by soaring demand for its high-bandwidth memory (HBM) chips, which saw a 50% sequential revenue jump in Q3 2025. Crucially, Micron's valuation metrics remain far more attractive than Nvidia's. Its forward price-to-earnings (P/E) ratio of 12.56 is less than a third of Nvidia's 40.11 according to financial data, while its price-to-sales ratio also suggests it is undervalued relative to peers in the AI infrastructure space as reported by investment analysts.

Micron's price-to-book (P/B) ratio of 4.67–5.49 in 2025 according to macroeconomic trends and an enterprise value-to-EBITDA (EV/EBITDA) ratio of 14.31–17.5 as detailed in financial analysis place it above industry averages but below competitors like Samsung (P/B: 1.22) and SK Hynix (P/B: 4.06). This discrepancy reflects investor skepticism about memory chipmakers' cyclical nature, but it also creates a margin of safety for Micron, which is now capturing 23%–24% of the HBM market by year-end 2025.

Nvidia's Stretched Valuation and Sticky Moat

Nvidia's dominance in AI is undeniable. Its data center revenue hit $46.7 billion in Q2 2025, with AI-driven growth accounting for 17% of total revenue. The company's CUDA platform and aggressive product roadmap-featuring next-gen GPUs like Rubin and Feynman-have created a "sticky" ecosystem that locks in developers as noted by financial analysts. However, these strengths come at a cost. Nvidia's forward P/E of 23.1x according to market forecasts and EV/EBITDA of 23.1x as reported by market analysis are significantly higher than Micron's, reflecting both its market leadership and stretched valuation.

Analysts project Nvidia's revenue to exceed $213 billion in fiscal 2026, with earnings per share growing 69.4% year-over-year according to market projections. Yet such growth is predicated on sustained demand for its Blackwell and H200 chips, which face competition from rivals like AMD and Intel. Moreover, Nvidia's reliance on HBM-a segment where Micron is a key supplier-creates a dependency that could limit its margins if memory prices stabilize or decline.

The Memory Chip Sector's Hypergrowth Potential

The AI boom is driving a structural shift in memory demand. High-bandwidth memory (HBM) is expected to grow at a 35% CAGR through 2028, with revenue nearly doubling to $34 billion in 2025 alone according to market research. DDR5 and NAND flash are also seeing strong adoption, though at slower rates as reported by industry analysis. This demand is outpacing supply, with 16Gb DDR5 prices surging from $6.84 to $27.20 in Q4 2025. Analysts warn that these price pressures could persist until 2027–2028, when new fabrication plants come online according to financial forecasts.

Micron is uniquely positioned to benefit. Its strategic investments in U.S. manufacturing and sustainability goals-such as achieving net-zero emissions by 2050-align with global regulatory trends. Meanwhile, its lower market capitalization compared to Nvidia creates more room for percentage growth as AI infrastructure spending accelerates as noted by market analysts.

The Case for Micron

While Nvidia's ecosystem and product cadence are formidable, Micron's valuation metrics and growth trajectory offer a compelling alternative. At a forward P/E of 12.56, Micron trades at a discount to its historical average of 9.8x according to financial data, suggesting it is undervalued relative to its fundamentals. By contrast, Nvidia's stretched multiples leave less room for error in a sector prone to rapid technological shifts.

Moreover, Micron's role as a key supplier of HBM to AI data centers means it could benefit from the same demand drivers as Nvidia without shouldering the same valuation risks. As one analyst noted, "Micron's ability to scale HBM production while maintaining healthy margins positions it as a critical enabler of the AI era" according to market commentary.

Conclusion

The AI revolution is a two-sided bet: Nvidia's GPUs are the engines, but Micron's memory chips are the fuel. While Nvidia's dominance in AI hardware is well-earned, its valuation metrics suggest it is already priced for perfection. Micron, by contrast, offers a more attractive risk-reward profile, with robust growth, undervalued fundamentals, and a critical role in the AI memory supercycle. For investors seeking exposure to the AI boom, Micron may prove to be the better long-term play.