While the artificial intelligence ecosystem tends to coalesce around the usual suspects, it’s the less-appreciated enterprises that may offer the biggest surprises, in large part because of the benefit of low expectations. One prime example arguably is semiconductor specialist Micron Technology (NASDAQ:MU). Not typically a headline-driving entity, MU stock is nevertheless well worth consideration for its pertinence to machine intelligence.
Most notably, Micron has experienced substantial growth in its data center segment, with revenue skyrocketing by 400% year-over-year and 40% sequentially. Presently, this unit accounts for over half of the company’s total revenue. Of course, this dramatic performance upside stems mainly from soaring demand for AI infrastructure — which is really Micron’s forte thanks to its high-bandwidth memory (HBM) chips.
Micron happens to be one of the few major suppliers of HBM chips, thereby allowing it to capitalize on the expanding AI market.
On a related note, Micron’s strategic position in this semiconductor specialty has given it an advantage in soaking up increasing demand for AI servers. According to Precedence Research, the global AI server market size reached a valuation of $30.74 billion last year. By 2034, the sector could weigh in at $352.28 billion, representing a compound annual growth rate (CAGR) of almost 28%.
With such a massive runway, analysts’ projections for impressive growth are quite credible. For instance, Wall Street anticipates fiscal 2025 sales to land at $35.09 billion, up 39.73% from last year. And in fiscal 2026, revenue could again climb by double-digit percentage points to $44.84 billion.
So yes, while MU stock trades at 3.63X trailing-year revenue right now (which is arguably quite reasonable), the equity is actually trading at under 3X this year’s sales and about 2.34X 2026 sales. You’re not going to find too many compelling AI stocks with that kind of subterranean multiple.
Another factor to consider when assessing MU stock is its upward bias. Using data over the trailing five years, a purely stochastic or temporal view of the security reveals a slight edge for the bulls. Specifically, a position entered at the beginning of the week will have a 48.9% chance of rising by the end of it. Admittedly, that’s not great. However, over a four-week period, the long odds noticeably rise to 53.44%.
Of course, human emotions operate the market. In the case of MU stock, investors are motivated buyers when there is a modest tailwind involved. For example, last week, MU gained 4.12%. During one-week periods when the equity gains up to 5%, the long odds for the subsequent week hits 53.09%. Over the subsequent four weeks, the long odds stand at just under 57%.
Granted, we’re not talking about groundbreaking probabilities here. Still, this is a sound enterprise with a reliable cadence, making it potentially appropriate as both a long-term investment and as a trading vehicle.
Regarding the latter point, risk-tolerant investors may want to consider a multi-leg options trade called the bull call spread, which involves buying a call option and simultaneously selling a call at a higher strike price (for the same expiration date).
One idea to consider is the 95/97 bull call spread for the options chain expiring March 7. For this transaction to be fully successful, MU stock will need to rise 3.1% to $97 or above and stay there by expiration. At time of writing, a speculator risks $100 for the chance to earn a maximum of $100 — a payout of 100%.
