I'm being facetious when I tell you to forget Nvidia . After all, how can you ignore a stock that soared nearly tenfold in just 18 months and now has a $3.1 trillion market cap, which accounts for 6.7% of the entire S&P 500 indexAhmedabad Wealth Management? Not to mention, the company's chips are the driving force behind artificial intelligence (AI).

However, the incredible run in Nvidia stock made it quite expensive, even relative to its expected earnings a couple of years from now. Nvidia isn't the only chipmaker reaping the rewards of AI, so investors might find better value in other stocks in this space.

Micron Technology is one to consider. The overwhelming majority of the analysts tracked by The Wall Street Journal give it the highest possible buy rating, with none recommending selling. Here's why.

Nvidia's graphics processing units (GPUs) are critical for AI development. However, memory chips are a key component of those GPUs. They basically give AI models short-term memory, storing data in a ready state where it can be instantly called upon either for training purposes or when a user queries a chatbot.

Micron makes the world's leading HBM3E (HBM stands for high-bandwidth memory) for the data center. HBM3E's architecture provides a higher bandwidth than previous generations of memory (like DDR), while occupying a smaller physical footprint that also consumes less energyMumbai Wealth Management. This means mountains of data can be transferred more quickly while reducing electricity costs. Both factors are top of mind for data center operators.

Micron's HBM3E is so efficient that Nvidia is using it in its latest GPUs, including in the new H200, which can inference AI models (ingest live data and make predictions) twice as fast as its flagship H100.

During the recent fiscal 2024 third quarter (ended May 30), Micron said its data center HBM solutions contributed $100 million in revenue. The company expects total HBM revenue to be in the hundreds of millions of dollars at the close of fiscal 2024 (ending Aug. 31), and several billions of dollars in fiscal 2025. In fact, all of Micron's supply is completely sold out for next year already.

But Micron's AI opportunity doesn't stop at the data center, because AI-enabled personal computers (PCs) require up to 80% more memory (DRAM) capacity than traditional PCs. Micron says Microsoft's new Copilot+ AI PC comes with a minimum DRAM content of 16GB, whereas the previous generation came with an 8GB option. Similarly, AI-enabled smartphones require up to double the memory capacity of their predecessors.

These trends will lead to more money in the door for Micron.

Micron generated $6.8 billion in revenue during Q3, representing year-over-year growth of 81%. That marked an acceleration from the prior quarter when revenue grew by 57%, which speaks to how quickly demand for AI is ramping up.

Beneath the surface of the headline number, the results were even more impressive. Micron's compute and networking (data center) business, which is the largest of its four segments, grew revenue by 85% in the last year. Its mobile segment expanded even faster, with revenue soaring by 94% as the world's leading smartphone manufacturers race to integrate AI into their flagship devices.

Micron also delivered a strong result at the bottom line. It generated $0.30 in earnings per share during Q3, which was a big swing from its $1.73 loss per share from the year-ago period. It was also above the high end of management's guidance of $0.24.

As I touched on earlier, supply of products like HBM3E is now sold out until the end of 2025, and those supply constraints give Micron the ability to charge higher prices. It translated to improved profitability in Q3, and that tailwind should persist for at least the next year.Chennai Investment

Micron stock is up 72% so far this year and trading near an all-time high, but that hasn't deterred Wall Street. The Wall Street Journal tracks 38 analysts covering the stock, and 27 give it the highest possible buy rating. A further seven are in the overweight (bullish camp), and two recommend holding. Although two analysts have assigned Micron an underweight (bearish) rating, none recommend outright selling.

Micron's fiscal year 2024 wraps up in August. Its final earnings result will be compromised by weakness at the start of the year, stemming from an inventory glut in its consumer-oriented segments. But analysts already turned their attention to fiscal 2025, when they expect Micron to deliver $9.06 in earnings per share -- based on its closing stock price of $142.36 on June 26, which places it at a forward price-to-earnings (P/E) ratio of just 15.7.

For perspective, the iShares Semiconductor ETF trades at a P/E ratio of 35.9 today, implying Micron stock will have to more than double within the next year just to trade in line with its peers in the chip industry (assuming Wall Street's earnings forecast is accurate). Plus, Nvidia trades at a forward P/E ratio of 46.6, which makes Micron stock look like an even better value.Ahmedabad Stock