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 its growth counterpart. Micron has risen more than 250% on an AI-driven memory shortage and trades below 5.5x forward earnings; Cisco is up more than 40% as telecom orders rose 30% and enterprise orders 21%; Texas Instruments is up nearly 50%, with industrial revenue up 30% and data-center revenue expected to double this fiscal year. The article argues that AI infrastructure demand is supporting a more durable growth cycle, though Cisco at 21x forward P/E and Texas Instruments at 30x are no longer conventionally cheap.

Analysis

MU offers the cleanest operating leverage to AI capex, but the market is likely capitalizing peak-cycle margins rather than a normalized earnings base. The key diligence item is whether reported long-term agreements contain enforceable take-or-pay volumes, meaningful price floors, and customer cancellation protections; absent those terms, they should not justify a structural multiple re-rating. Over the next 1-3 months, HBM qualification yields and conventional DRAM/NAND spot-price direction matter more than AI-server shipment headlines; a flattening in contract pricing would expose MU's extreme earnings sensitivity after its run.

The less obvious relative-value implication is that constrained HBM capacity diverts wafer and packaging resources from commodity memory, extending pricing support across the memory complex while raising input-cost risk for server OEMs and storage vendors. SK Hynix's competitive position remains a material risk to MU's HBM mix and pricing, so MU should not be treated as a pure US AI proxy. A durable rerating requires evidence that HBM mix offsets the eventual normalization in legacy-memory pricing over the next 6-18 months.

CSCO and TXN appear more vulnerable to expectation risk than to a near-term demand air pocket. CSCO's premium valuation requires sustained order conversion into revenue and software/security mix improvement; AI networking spend can migrate toward NVDA, AVGO, Arista (ANET), and white-box architectures if customers prioritize scale-out Ethernet economics. TXN's data-center opportunity is strategically useful but too small to immunize the broader industrial and automotive franchise from inventory corrections; at a premium multiple, even a modest moderation in industrial bookings can compress the stock before earnings decline.

Key Decisions for Investors

• Maintain a tactical long MU position only with a 1-3 month catalyst horizon into memory pricing and earnings revisions; use a 10-15% trailing risk limit or defined-risk call spreads rather than unhedged exposure. Add only if DRAM contract pricing and HBM shipment/margin commentary remain firm; exit on sequential pricing weakness or guidance that implies mix dilution.
• Express the AI-memory thesis as long MU / short an equal-dollar basket of legacy storage exposure where feasible, rather than outright long MU after the momentum move. The thesis is that HBM-related capacity diversion supports MU's mix while weaker commodity-demand conditions pressure lower-value storage; reassess if NAND pricing accelerates faster than DRAM/HBM.
• Avoid adding CSCO at current relative valuation; consider a 3-6 month CSCO / long AVGO or CSCO / long ANET relative short only if subsequent results show networking revenue growth lagging order growth or gross-margin pressure from hardware mix. Cover if CSCO demonstrates sustained double-digit revenue growth plus expanding software mix.
• Treat TXN as a watchlist long, not a fresh momentum entry. Initiate only after industrial booking trends confirm that demand is end-market driven rather than channel replenishment; a renewed inventory build, weaker analog utilization commentary, or reduced factory-automation orders would falsify the near-term upside case.