Two Undervalued AI Stocks to Watch: Micron Technology and AMD

Stocks are back at an all-time-high, but some artificial intelligence (AI) stocks are still a good deal. Micron Technology is growing rapidly, and yet its shares trade at a P/E of just 16. AMD has emerged as the closest challenger to Nvidia in the data center GPU market.

Less than three months after the stock market plunged on President Donald Trump's 'Liberation Day' tariffs announcement, major indexes are back near all-time highs. Investors have shrugged off concerns around tariffs and a potential economic slowdown as businesses adjusted to the new trade regime and as economic data so far around unemployment and inflation has been stable, showing that tariffs have not yet had a significant impact on the economy.

Despite the resurgence, which has led to stocks like Nvidia hitting all-time highs again, there are still deals to be found among AI stocks. Keep reading to learn about two of them.

Fresh off its latest earnings report, Micron Technology just delivered another strong round of results in the fiscal third quarter, beating estimates on the top and bottom lines and offering better-than-expected guidance for the fourth quarter. There was one blemish in the report, which was that pricing declined slightly on a sequential basis, leading to the stock falling less than 1% on Thursday. However, Micron still looks well-positioned to capitalize on the AI boom.

Its data center business is surging, more than doubling on a year-over-year basis, pacing overall revenue growth of 37%. It also reported nearly 50% revenue growth in high-bandwidth memory (HBM), and reached record DRAM revenue, which includes HBM. Micron's margins also improved. Its gross margin jumped from 26.9% to 37.7%, and operating margin increased from 10.6% to 23.3%. Adjusted earnings per share more than tripled from $0.62 to $1.91.

In addition to its ramping financials, Micron finds itself in an advantageous position because it's the only U.S. manufacturer of advanced memory chips, meaning it's strategically important to the country at a time when the government is focused on reshoring chip production and ensuring adequate supply. Micron was awarded $6.2 billion from the CHIPS Act, and also agreed to invest $200 billion in new foundries and R&D in the U.S., though the timeline on that is unclear.

Looking at valuation, Micron looks cheap. Based on its latest guidance, the stock trades at a forward P/E of less than 16, and analysts expect earnings per share to hit $12 in fiscal 2026, giving the stock a P/E of roughly 10 based on that forecast. Micron does face cyclical risk, but if the company can hit those numbers, the stock is a good bet to move higher.

Meanwhile, AMD has emerged as a formidable competitor in the data center GPU market. The company has made significant strides in recent years, challenging Nvidia's dominance with its advanced GPU offerings. AMD's EPYC processors and Radeon Instinct GPUs have gained traction among data center operators, thanks to their performance and cost efficiency.

AMD's latest financial results are also impressive. The company reported strong revenue growth and improved margins, driven by its growing presence in the data center and gaming markets. AMD's stock, while not as undervalued as Micron, still offers a compelling investment opportunity, especially for those looking to diversify their AI portfolio.

In summary, Micron Technology and AMD are two AI stocks that are currently undervalued and poised for growth. Both companies are well-positioned to capitalize on the AI boom and offer attractive investment opportunities for investors looking to capitalize on the next wave of technological innovation.