<div id="readability-page-1"><p>The artificial intelligence (AI) revolution is transforming every corner of the global economy. <strong>Nvidia</strong>, the company at the center of this revolution, continues to be a Wall Street favorite for all the right reasons. As an undisputed leader in accelerated computing, the company's hardware and software power much of the world's AI infrastructure buildout.</p> <p>Shares of Nvidia have already surged over 43% so far in 2025. However, despite the massive demand for its Blackwell architecture systems, software stack, and networking solutions, the stock may grow quite modestly in future months. With its market capitalization now exceeding $4.6 trillion and shares trading at a premium valuation of nearly 30 times forward earnings, much of the optimism is already priced in.</p> <p>Memory giant <strong>Micron</strong> <span>(MU<span> 6.12%</span>)</span>, on the other hand, is still in the early stages of its AI-powered growth story. Shares of the company have surged nearly 128% in 2025, which highlights the increasing investor confidence in its high-bandwidth memory and data center portfolio. Yet, Micron could still offer investors higher returns in 2026, while riding the same AI wave. Here's why.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MzY3NTIvYW5hbHlzdF9zaXR0aW5nX29uX3dvcmtfZGVza193aXRoX2luZmFudF9hbmRfY2hlY2tpbmdfc21hcnRwaG9uZS5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MzY3NTIvYW5hbHlzdF9zaXR0aW5nX29uX3dvcmtfZGVza193aXRoX2luZmFudF9hbmRfY2hlY2tpbmdfc21hcnRwaG9uZS5qcGcmdz03MDA"/></p><p>Image source: Getty Images.</p> </div> <h2>Lower customer concentration risk</h2> <p>Wall Street has been highlighting one significant underappreciated risk for Nvidia. Nvidia's revenues depend heavily on a few hyperscaler customers, with two accounting for 39% and four accounting for 46% of its revenues in the second quarter of fiscal 2026 (ending July 27, 2026). Many of these hyperscaler clients are developing proprietary chips, which may offer a price-performance optimization in their specific workloads. This may reduce their dependence on Nvidia's chips in future years.</p>  <p>Micron's revenue base is significantly more diversified than Nvidia's. The company's largest customer accounted for 17% of total revenue, while the next largest contributed 10% in fiscal 2025 (ending Aug. 28, 2025). The company has earned over half of its total revenues from the top 10 customers for the past three years. The company has a reasonably broad customer base, including data center, mobile, PC, automotive, and industrial markets.</p> <p>Hence, compared with Nvidia, Micron's lower concentration risk makes it more resilient in the current economy.</p> <h2>HBM demand and AI memory leadership</h2> <p>Micron's high-bandwidth memory (HBM) products, known for their superior data transfer speeds and energy efficiency, are being increasingly used in data centers. HBM revenues reached nearly $2 billion  in the fourth quarter of fiscal 2025, translating into $8 billion annualized run rate.</p> <p>Management expects Micron's HBM market share to match its overall DRAM share  by the third quarter of fiscal 2025. The company now caters to six HBM customers and has entered into pricing agreements covering most of the 2026 supply of HBM third-generation extended (HBM3E) products.</p> <p>Micron has also started sampling HBM fourth-generation (HBM4) products to customers. The company expects the first production shipment of HBM4 in the second quarter of calendar year 2026 and a broader ramp later that year.</p> <p>Beyond HBM, Micron's Low-Power Double Data Rate (LPDDR) memory products are also seeing strong demand in data centers. The data center business has emerged as a key growth engine, accounting for 56% of Micron's total sales in fiscal 2025.</p> <p>Hence, Micron seems well-positioned to capture a significant share of the AI-powered memory demand in the coming years.</p> <h2>Valuation</h2> <p>Micron appears to offer a stronger risk-reward proposition than Nvidia, even in the backdrop of accelerated AI infrastructure spending. The company currently trades at 12.3 times forward earnings, significantly lower than Nvidia's valuation. Hence, while Nvidia's premium valuation already assumes near-perfect execution and continued dominance, Micron still trades like a cyclical memory stock. This disconnect leaves room for modest valuation expansion to account for Micron's improving revenue mix toward high-margin AI memory products.</p> <p>Wall Street sentiment is also increasingly positive for Micron. Morgan Stanley's Joseph Moore recently upgraded the stock from equal-weight or neutral to overweight and raised the target price from $160 to $220. UBS has reiterated its &#34;Buy&#34; rating and increased the target price from $195 to $225. Itau Unibanco analyst has initiated coverage for Micron with a &#34;Buy&#34; rating and target price of $249.</p> <p>Analysts expect Micron's earnings per share to grow year over year by nearly 100% to $16.6 in fiscal 2026. If the current valuation multiple holds, Micron's share price could be around $204 (up 6% from the last closing price as of Oct. 9), with limited downside potential. But if the multiple expands modestly in the range of 14 to 16 times forward earnings, shares could fall in the range of $232 to $265, offering upside of 20% to 37.8%.</p> <p>On the other hand, there remains a higher probability of valuation compression for Nvidia, leaving less room for growth. With diversified customers, increasing AI exposure, and reasonable valuation, Micron may prove to be the better semiconductor pick in 2026.</p>                                                                            </div>

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<p>Nvidia's stock has surged 43% in 2025, but analysts suggest Micron may be a better buy for 2026. While Nvidia leads in AI infrastructure, its revenue is heavily reliant on a few customers, posing risks. In contrast, Micron's diversified customer base and strong demand for its high-bandwidth memory position it well for growth. Micron trades at a lower valuation than Nvidia, with analysts projecting significant earnings growth and potential share price increases of 20% to 37.8%.</p>

- The article discusses the contrasting positions of Nvidia and Micron in the AI-driven semiconductor market.  
- While Nvidia's stock has surged due to its leadership in AI infrastructure, concerns about customer concentration risk and high valuation may limit future growth.  
- In contrast, Micron's diversified revenue base and strong demand for its high-bandwidth memory products position it for potentially higher returns in 2026.

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Nvidia Stock Is Up 43% in 2025, but Here's Another Super Semiconductor Stock to Buy in 2026, According to Certain Wall Street Analysts