Undervalued and Profitable: 2 Artificial Intelligence (AI) Stocks for Long-Term Portfolios

The article highlights Marvell Technology and Micron Technology as undervalued AI beneficiaries poised for long-term growth. Marvell's fiscal Q1 revenue surged 63% driven by custom AI processor demand, with expectations of continued growth and market share gains in the custom AI chip market, while Micron is seeing increased demand for its high-bandwidth memory (HBM) used in AI accelerators, projecting significant revenue growth in the coming years as AI adoption expands in smartphones and PCs.

Analysis

The article identifies Marvell Technology (MRVL) and Micron Technology (MU) as undervalued companies poised for significant long-term growth driven by the secular trend in Artificial Intelligence (AI). Marvell demonstrated a substantial financial turnaround in its first quarter of fiscal 2026 (ended May 3), with revenue surging 63% year-over-year to $1.89 billion and achieving GAAP net income of $0.20 per share, a stark contrast to a loss of $0.25 per share in the prior year's quarter and tepid 5% revenue growth in fiscal 2025 (ended Feb 1). This resurgence is primarily attributed to a 76% year-over-year increase in its data center revenue to $1.44 billion, fueled by escalating demand for its custom AI processors and electro-optics products. Marvell's management expressed confidence in sustaining this AI-driven momentum, citing deep engagement with customers for current and next-generation custom chips and an ambition to capture over 20% of an AI-focused addressable market projected to reach $75 billion by 2028, up from an estimated 10-15% share in 2023. With AI revenue exceeding $1.5 billion in fiscal 2025, this market expansion could elevate AI revenue to over $7.5 billion in the next three fiscal years. Currently, Marvell trades at 22 times earnings, a discount to the Nasdaq-100's multiple of 31.

Micron Technology is similarly benefiting from AI, particularly through demand for its high-bandwidth memory (HBM) crucial for AI accelerators like GPUs and custom processors. The HBM market is forecasted to expand dramatically from $1.8 billion in 2023 to $86 billion in 2030, a 68% CAGR, as AI chip designers incorporate larger HBM capacities into new hardware. Beyond data centers, the integration of AI into smartphones and PCs is expected to further boost demand for Micron's compute and storage memory. This tailwind is already evident in Micron's financials, with revenue increasing 59% in the first six months of its current fiscal year and a swing to a GAAP profit of $3.08 per share from a $0.40 loss per share year-over-year. Consensus estimates project a 439% jump in adjusted earnings this year, followed by a 58% increase next year. Micron trades at an attractive 11 times forward earnings. The overall sentiment for these companies is strongly positive, reflecting their strong growth prospects within the AI sector.

Key Decisions for Investors

• Investors should consider Marvell Technology for long-term AI exposure, given its significant Q1 fiscal 2026 revenue acceleration, strong data center growth driven by custom AI chips, and a valuation that appears attractive relative to its growth potential and peers.
• Micron Technology warrants attention due to its pivotal role in the rapidly expanding HBM market, its robust revenue and earnings recovery, and a compelling forward earnings multiple of 11, suggesting potential for significant upside as AI adoption broadens.
• Both companies are strongly positioned within the AI value chain and present opportunities for growth at potentially reasonable valuations; however, investors should note the article's optimistic tone and conduct their own due diligence, particularly regarding execution risks and evolving market dynamics in the competitive semiconductor industry.
• Monitor ongoing AI hardware demand, HBM market developments, and competitive positioning for both Marvell and Micron, as these factors will be critical determinants of their sustained growth trajectories.