Micron Technologies (MU) is experiencing a second consecutive day of gains, with its shares increasing by 6% today after advancing 10.5% yesterday. This uptrend can be attributed to the recent announcement made by Nvidia (NVDA), where they disclosed that Micron’s chips will be used in their new products.

Nvidia’s Endorsement and Its Impact on MU

During a recent press conference, Nvidia CEO Jensen Huang revealed that Micron’s high-bandwidth-memory (HBM) chips have been incorporated into NVDA’s new GeForce RTX 50 Blackwell gaming chips. This collaboration between two industry leaders has sent shockwaves through the market, resulting in a significant boost to MU’s stock price.

The Importance of HBM for Micron

High-bandwidth memory (HBM) is a crucial component in AI and machine learning applications. Its ability to provide high-speed data transfer capabilities makes it an essential ingredient in various industries. For Micron, HBM has been a significant growth driver, contributing substantially to the company’s revenue.

Micron’s Earnings Call Highlights

During its fiscal first-quarter earnings call on December 18th, Chief Business Officer Sumit Sadana highlighted the importance of HBM in driving Micron’s revenue. He noted that the combination of HBM and SSD chips had enabled a staggering 400% increase in data center revenue compared to the same period last year.

Sadana also emphasized that HBM has become a multi-billion-dollar business for Micron, with over half of its revenue generated from data centers. This remarkable growth can be attributed to the increasing demand for high-speed memory solutions in various industries, including AI and machine learning.

Foxconn’s Strong Q4 Results and MU’s Connection

The slight increase in Foxconn’s Q4 results has likely contributed to MU’s positive performance yesterday. As one of the largest manufacturers of Apple’s (AAPL) iPhones, Taiwan-based Foxconn reported sales of 2.13 trillion New Taiwan dollars or $65 billion. Although this figure is slightly lower than expected, it still reflects a strong quarter for the company.

As a major supplier of chips to Apple, Micron’s connection to Foxconn and its strong results has undoubtedly had a positive impact on MU’s stock price.

Evercore’s List of AI Enablers and Adapters

Yesterday, Micron was included in Evercore ISI’s list of ‘AI Enablers, Adopters, and Adapters.’ This exclusive list comprises companies whose market caps exceed $3 billion and have a proven track record of incorporating AI into their business strategies.

To be eligible for this prestigious list, companies must meet several criteria:

• Previous earnings calls: The company’s previous earnings calls must include more references to AI than average for Russell 2000 members in the previous four quarters.
• Positive reaction to earnings: The company’s stock must have had a positive reaction to their earnings announcement.
• Forward P/E ratio: The company’s forward P/E ratio must trade below its five-year average.

Evercore ISI predicts that the earnings per share of all companies on this list will increase by at least 9.6%.

Conclusion

While Micron Technologies (MU) has been a significant beneficiary of Nvidia’s endorsement, our conviction lies in identifying AI stocks with greater potential for delivering higher returns within a shorter time frame.

If you are looking for an AI stock that is more promising than MU and trades at less than 5 times its earnings, we recommend checking out our report on the cheapest AI stock.

Additional Recommendations

For those interested in investing in AI-related stocks, we suggest exploring the following:

• 8 Best Wide Moat Stocks to Buy Now: This article provides an overview of companies with strong competitive advantages that can deliver long-term returns.
• 30 Most Important AI Stocks According to BlackRock: This list highlights companies that are likely to benefit from the growing demand for AI solutions.

Disclosure

The author owns shares of MU but has no plans to trade them in the next 48 hours.