Value Has Outperformed Growth in 2026: 3 Surprising Tech Stocks Leading the Way

Micron, Cisco, and Texas Instruments have helped value stocks outperform in 2026, with the Vanguard Morningstar Value ETF up 19.8% year-to-date versus 9.0% for the growth ETF. Micron has risen more than 250% amid an AI-driven memory shortage and trades below 5.5x forward earnings, while Cisco is up more than 40% as telecom orders increased 30% and enterprise orders rose 21%. Texas Instruments has gained nearly 50%, supported by data-center demand expected to double this fiscal year and 30% industrial-segment revenue growth, though its 30x forward P/E limits its apparent value appeal.

Analysis

MU’s low headline multiple is not necessarily a mispricing: the market is discounting a sharp mid-cycle earnings normalization once HBM capacity additions and conventional DRAM supply catch up. The investable question is whether contracted pricing converts a historically spot-driven business into a materially more durable FCF stream; confirmation requires disclosed contract coverage, cancellation terms, and FY27 gross-margin resilience—not merely elevated near-term pricing. If HBM continues absorbing wafer capacity, the underappreciated spillover is tighter supply and improved pricing for conventional server DRAM, benefiting MU disproportionately versus customers with limited memory pass-through.

CSCO has the least favorable setup after its rerating: its valuation now requires networking, optics, security, and enterprise demand to all remain strong despite materially lower organic growth than AVGO or NVDA. AI clusters can reduce traditional switching content per dollar of compute if customers standardize on white-box networking or vertically integrated fabrics, while large orders from hyperscalers/neoclouds are inherently lumpy. Over the next 1-3 months, order growth and backlog conversion matter more than headline AI commentary; a sequential product-order deceleration or gross-margin compression would expose the premium multiple.

TXN’s data-center exposure is strategically useful but too small to independently justify a sustained premium analog valuation. The more consequential 6-18 month variable is whether industrial and auto inventory replenishment turns into genuine end-demand growth while its incremental 300mm capacity ramps; if utilization lags, fixed-cost absorption can pressure margins even with healthy revenue. The consensus may be underestimating power-management content per AI server, but also overestimating how quickly that niche offsets broad industrial cyclicality.

Key Decisions for Investors

• Maintain a tactical long MU position only through the next earnings and contract-coverage update; target a 1-3 month upside from further FY27 estimate revisions, but reduce if management indicates HBM/DRAM pricing is no longer improving sequentially or if gross-margin guidance fails to expand. The key risk is that the sub-6x forward P/E reflects peak earnings rather than sustainable earnings.
• Initiate a relative-value pair: long MU / short CSCO in equal dollar beta-adjusted size over 3-6 months. MU has greater sensitivity to continuing AI infrastructure capex and potential memory supply discipline, while CSCO needs sustained broad-based order growth to defend its multiple; exit if CSCO organic product-order growth reaccelerates meaningfully or MU’s pricing commentary weakens.
• Avoid adding TXN at current valuation until the next industrial-bookings and utilization readout. Set a buy alert for evidence that industrial revenue growth remains above 20% while gross margin stabilizes despite capacity ramp; absent that confirmation, TXN offers unfavorable downside if the industrial cycle rolls over.
• Monitor AVGO and NVDA customer commentary for any shift from accelerator scarcity toward memory availability as the principal deployment bottleneck. Such a shift supports MU near term but becomes a risk signal once announced HBM capacity expansions begin converting to qualified supply in 6-18 months.