If you'd invested $10,000 in shares of Nvidia (NASDAQ: NVDA) a decade ago, your investment would now be worth almost $1.5 million.

Various catalysts have driven the astronomical rise in Nvidia stock over this period. The strong demand for graphics cards used in personal computers (PCs), driven by gaming and cryptocurrency, along with the artificial intelligence (AI)-fueled surge in data center graphics cards, has been instrumental in boosting Nvidia's revenue and earnings in recent years.

Nvidia's robust growth drivers have made it the world's largest company by market cap. Investors, therefore, may be wondering whether this semiconductor bellwether can make them millionaires once again in the long run. Let's see whether Nvidia can replicate its stunning returns over the coming decade and turn $10,000 into a million dollars.

Image source: Getty Images.

A 100x jump in Nvidia stock is unlikely, but that's half the story

Nvidia now has a market cap of $5.5 trillion. The stock will need to jump by 100x from current levels to turn $10,000 into a million, which means its market cap will need to exceed $500 trillion for investors to become millionaires.

That seems absurd, considering that the size of the global economy is poised to hit $150 trillion in 2030, according to Visual Capitalist. The firm notes that the global gross domestic product (GDP) is on track to grow by $25 trillion between 2026 and 2030. Nvidia, therefore, is unlikely to become larger than the global economy in the long run.

In simple words, investing $10,000 in Nvidia right now in the hope that this single investment alone will make you a millionaire is not the right idea. However, buying $10,000 worth of Nvidia's shares as a part of a diversified portfolio could indeed help investors achieve their goal of becoming millionaires over the long run.

Here's why.

Nvidia can become a much bigger company over the next decade

Nvidia has grown significantly over the last decade. The company's annual revenue in fiscal 2017 (which ended in January 2017) was $6.9 billion. Analysts expect Nvidia's revenue to land at $411 billion in fiscal 2027, an increase of almost 60x in a decade.

The good news for Nvidia investors is that it still has a lot of room for growth. Deloitte estimates that the global semiconductor market could be worth $975 billion in 2026, with $500 billion coming from sales of AI chips. Nvidia rival AMD forecasts that sales of AI accelerator chips could hit $1 trillion in 2030. Even better, the overall semiconductor market could be worth $2 trillion in 2036, according to Deloitte, even with moderate growth.

Nvidia is a key player in the global AI chip market with an estimated 80% share. So, the secular growth of the semiconductor market, primarily fueled by AI chips, should ensure healthy long-term growth for Nvidia. Additionally, the emergence of new AI-fueled applications beyond data centers, such as physical AI, and the integration of AI into edge devices, such as PCs, should open additional growth avenues for Nvidia.

The physical AI market, for instance, could be worth $430 billion in 2030 and hit $1.6 trillion in 2040, according to a third-party report. Physical AI refers to the integration of AI into real-world objects, such as machines, robots, and vehicles. The integration of this technology in multiple industries, ranging from healthcare to industrial to defense to space to retail, is poised to drive robust growth in this market over the long run.

Nvidia is already strengthening its position in physical AI. The company noted on its recent earnings call that Amazon will adopt its full physical AI stack to automate its warehouse robots. Noetra, a government-backed Japanese company developing physical AI and industrial robotics applications, will also adopt Nvidia's physical AI tools.

These growth opportunities indicate why analysts expect Nvidia's revenue to increase at a healthy pace even after the strong base it has already achieved.

Data by YCharts

For comparison, Nvidia reported $215.9 billion in revenue in fiscal 2026 (which ended in January this year). The chart above suggests that its top line is on track to increase 4x in just two years. Even better, analysts have been boosting their long-term earnings growth expectations.

Data by YCharts

Assuming Nvidia's earnings indeed increase at an annual pace of 49% for the next five years, its earnings per share will jump to $35 at the end of the forecast period (using fiscal 2026's earnings of $4.77 per share as the base). If Nvidia trades at 21 times earnings at that time, in line with the S&P 500 index's forward earnings multiple, its stock price could jump to $735 in five years.

That's nearly 3.2x Nvidia's current stock price, making it an ideal growth stock for investors looking to build a million-dollar portfolio, especially considering that it trades at an attractive 25 times forward earnings even after its terrific growth and sunny prospects.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, and Nvidia. The Motley Fool has a disclosure policy.

Sandisk (NASDAQ:SNDK) stock has been on a tear over the past year, with shares of the company rising by an incredible 2,400% during this period, as of this writing.

The semiconductor stock's stunning rise is justified by its phenomenal growth. The NAND flash storage products that the company manufactures are in terrific demand from artificial intelligence (AI) data centers, a trend that's likely to continue over the coming year. In fact, I won't be surprised to see Sandisk stock jumping significantly higher over the next 12 months.

Let's see where this high-flying AI stock could be after a year.

Image source: The Motley Fool.

Sandisk stock is headed higher, according to Wall Street

Wall Street believes that Sandisk still has room to jump higher. This is evident from the stock's 12-month median price target of $2,200, which suggests potential upside of 26% from current levels. What's worth noting is that 25 of the 31 analysts covering Sandisk suggest buying the stock.

However, I think that Wall Street is underestimating Sandisk's upside potential. The NAND flash market that Sandisk serves is poised to keep growing next year. Market research firm TrendForce sees the NAND flash industry's revenue rising almost fourfold in 2026 to $271 billion from $71 billion last year. It anticipates another 40% increase in the NAND flash industry's revenue in 2027 to $379.4 billion.

Not surprisingly, Sandisk is confident of maintaining its phenomenal growth rate in fiscal 2027. The company released its fiscal Q4 2026 results (for the year ended July 3) on Aug. 5. Its quarterly revenue surged 372% year over year to $8.96 billion. What's more, the supply constrained environment in the NAND flash market led to an eye-popping 135x year-over-year increase in non-GAAP earnings per share to $39.25.

The company expects $10.3-$10.8 billion in revenue for the current quarter. That points to a potential year-over-year revenue increase of 357% at the midpoint. Meanwhile, the $45.00 earnings-per-share estimate for the current quarter suggests a potential 37x year-over-year jump in its bottom line. The guidance suggests that Sandisk's exponential growth is here to stay.

This also explains why analysts have increased their revenue and earnings per share forecasts for the current fiscal year.

SNDK Revenue Estimates for Current Fiscal Year data by YCharts

Why Sandisk's returns could be higher than expected

Sandisk's earnings could triple in fiscal 2027 on the back of a 142% jump in the top line. However, the company's fiscal Q1 forecast suggests it could exceed those numbers.

A key reason analysts anticipate Sandisk's growth will slow as the year progresses is a potential increase in NAND flash supply next year. Specifically, TrendForce predicts that NAND flash supply could overtake demand in the second half of 2027. For comparison, the NAND flash market could remain undersupplied by 4% to 5% in 2026.

However, it remains to be seen if that's actually the case. Major memory manufacturers have been prioritizing the production of high-bandwidth memory (HBM) owing to higher margins and robust demand. As a result, NAND flash wafer starts at Samsung and SK Hynix, two of the leading players in NAND flash, dropped in 2025.

SK Hynix's NAND flash output dropped to 1.7 million wafers in 2025 from 1.9 million in 2024, according to market research firm Omdia. Samsung's output also fell slightly to 4.9 million wafers from 4.68 million wafers over this period. These companies account for 47% of the NAND flash market, and their production cuts could keep the market undersupplied even in 2027.

So, I won't be surprised to see Sandisk's growth exceeding expectations in fiscal 2027 (which will end in July next year). However, even if its earnings per share jump by 3x to $214.10, as seen in the chart earlier, and it trades at even 15 times earnings at that time, a significant discount to the S&P 500 index's forward earnings multiple of 21, this tech stock could soar to $3,211 over the next 12 months. That indicates potential upside of 84%.

Sandisk's shares have pulled back by 25% from their recent 52-week high. This gives savvy investors a nice buying opportunity, which they should consider capitalizing on due to its healthy upside potential.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

An investment of $1,000 made in Nvidia (NASDAQ:NVDA) stock three years ago is now worth an impressive $4,500, according to YCharts. This impressive multibagger performance has been fueled by the company's dominant position in the artificial intelligence (AI) chip market, driving remarkable growth in revenue and earnings over this period.

Nvidia is now the world's largest company by market cap. Investors may therefore be wondering whether this stock can deliver further upside following its stunning run over the past three years. The good news is that Nvidia's growth rate isn't going to slow down any time soon, as evident from its latest quarterly report.

Let's take a closer look at Nvidia's catalysts and its growth potential for the next three years to check how much a $1,000 investment in this AI stock could be in 2029.

Image source: The Motley Fool.

Nvidia's guidance points toward outstanding earnings growth for the next three years

When Nvidia released its fiscal 2027 second-quarter results (for the three months ended July 26) on Aug. 26, it reported a year-over-year increase of 120% in non-GAAP earnings per share to $2.22. The strong bottom-line growth was driven by a 106% year-over-year jump in revenue, along with an improvement of 2.5 percentage points in Nvidia's non-GAAP gross margin.

Importantly, Nvidia management is confident of sustaining healthy gross margin levels despite higher component costs. For instance, the company estimates a non-GAAP gross margin of 74% in the current quarter, followed by a dip to 71% to 72% in fiscal Q4. The chip designer estimates that its gross margin will settle in the 72%-73% range next year, driven by price increases to offset higher component costs.

Nvidia's ability to sustain its margin profile, along with incremental spending on AI data center infrastructure, should ensure that its earnings per share continue to improve at a nice clip. After all, Nvidia sees capital spending by the top five U.S. hyperscalers increasing to $1.3 trillion in 2027, up from an estimated $800 billion in 2026.

Moreover, this estimate doesn't include the capital expenses incurred by neocloud providers and pure-play AI companies. Not surprisingly, market research provider Dell'Oro Group estimates that overall data center capex could exceed $3 trillion by 2030 to support the growing demand for AI workloads in the cloud.

So, data center capex could increase at a compound annual rate of 39% between 2026 and 2030. Another key point worth noting is that semiconductors reportedly account for 54% of the money spent on data centers, according to the Center for Strategic & International Studies. Nvidia controls an estimated 80% of the AI chip market. Also, it is expanding its presence in this space by entering lucrative areas such as server central processing units (CPUs).

So, it is easy to see why analysts have become more bullish on its revenue growth prospects for the next three fiscal years.

NVDA Revenue Estimates for Current Fiscal Year data by YCharts

Importantly, Nvidia's healthy market share also gives it solid pricing power, putting the company in a strong position to pass higher component costs on to customers. That probably explains why management noted on the latest earnings call that it will implement price increases starting in the first quarter of fiscal 2028.

In all, a combination of robust revenue growth and stable margins should eventually allow Nvidia to deliver strong earnings growth over the long run.

Nvidia stock still has multibagger potential

Nvidia's earnings per share in fiscal 2027 (which ends in January 2027) could increase by 95% to $9.29. Importantly, the earnings per share estimates for the next couple of years have jumped significantly.

NVDA EPS Estimates for Current Fiscal Year data by YCharts

Analysts now expect Nvidia's earnings to increase by 65% in fiscal 2028, followed by a 32% increase in fiscal 2029 (which will end in January 2029). Of course, Nvidia's growth could exceed expectations, especially considering that it anticipates a 70% increase in revenue in fiscal 2028. But even if Nvidia's earnings per share reach $20.45 in fiscal 2029 and it trades at 34 times earnings at that time (in line with the tech-focused Nasdaq-100 index's average earnings multiple), its stock price could jump to $695.

That's just over 3x Nvidia's current stock price. So, a $1,000 investment in Nvidia stock could be worth more than $3,000 by 2029, which is why investors can consider buying it hand over fist following its latest quarterly report.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ:NVDA) reported fantastic results for the second quarter of fiscal 2027 (which ended July 26), with the company's phenomenal revenue and earnings growth suggesting that it continues to dominate the lucrative artificial intelligence (AI) chip market.

The 106% year-over-year spike in Nvidia's revenue last quarter to $96.2 billion was fueled by a tremendous increase in its data center revenue. The company reported a 117% year-over-year increase in data center revenue last quarter to $89 billion, driven by the strong demand for its graphics processing units (GPUs) from hyperscalers, AI labs, and neocloud companies.

However, Nvidia also pointed out that it will make a big dent in the server central processing unit (CPU) market, an area dominated by Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD). Let's take a closer look at what Nvidia said about its server CPU prospects, and why its growing influence in this area doesn't bode well for AMD and Intel.

Image source: Nvidia.

Nvidia's server CPU business is growing at an incredible pace

Nvidia introduced its Grace server CPU in 2021. Management noted on the latest earnings call that the trailing-twelve-month revenue from Grace CPUs exceeds $5 billion. However, it's worth noting that Nvidia sells the Grace CPU as part of its server systems, which also include other chips. But the company is now looking to make a bigger splash in server CPUs. Nvidia is now offering its Vera server CPU as a stand-alone product.

Nvidia CFO Colette Kress remarked on the earnings call that the Vera CPU will expand the company's total addressable market (TAM) and could gain impressive traction among customers given its faster performance compared to other data center CPUs. Kress added:

We expect Vera to be deployed by every major hyperscaler, neocloud, AI lab, and system OEM, with shipments already underway to our lead partners, including OCI, SpaceXAI, and starting this quarter, AWS. We continue to see demand for approximately $20 billion in total server CPUs.

The $20 billion Vera server CPU revenue estimate for 2026 is quite impressive compared to the revenue Nvidia has generated from sales of its Grace CPUs. What's more, Nvidia believes that its server CPU revenue will more than double in fiscal 2028. AMD and Intel, which are the dominant players in the server CPU market, are growing at a relatively slower pace.

AMD's data center segment, which includes sales of both data center GPUs and server CPUs, saw a 107% year-over-year increase in revenue in Q2 to $6.7 billion. It has sold data center chips worth $12.5 billion in the first six months of 2026, translating into an annual run rate of $25 billion.

Intel, on the other hand, reported a 59% jump in its data center and AI (DCAI) segment revenue in Q2 to $6.3 billion. Its DCAI revenue stands at $11.4 billion for the first six months of 2026, translating into an annual run rate of almost $23 billion. Investors should note that both Intel and AMD include sales of other AI chips, such as custom AI processors and GPUs, into their data center segment. They don't single out their server CPU revenue.

However, Nvidia's revenue guidance for fiscal 2027 and fiscal 2028 suggests that its server CPU business is growing at a faster pace than what AMD and Intel have been clocking. In fact, Nvidia's overall data center business growth exceeded the growth rates reported by AMD and Intel in their data center segments last quarter. Nvidia managed this feat despite having a significantly higher revenue base in data centers.

The significant improvement the company anticipates in server CPU sales next year suggests it could continue to eat AMD's and Intel's lunch. Another important point worth noting is that Nvidia's Vera server CPU has been custom-designed using Arm Holdings' v9.2-A architecture. Intel and AMD, meanwhile, use the x86 architecture to design their server CPUs.

Tom's Hardware reports that Arm-based server CPUs now account for 45% of the data center market's revenue. Arm-based systems are experiencing solid demand due to their higher energy efficiency and performance for inference and agentic AI workloads. This explains why Arm-based server CPUs are anticipated to capture 90% of the server CPU market by 2029, according to Counterpoint Research.

This is great news for Nvidia investors, as the server CPU market is expected to be worth $220 billion in 2030, according to AMD.

Nvidia remains the best AI chip stock to buy

While Nvidia's aggressive progress in the server CPU market doesn't bode well for Intel and AMD, it is indeed good news for investors holding shares of the AI pioneer. After all, Nvidia is now in a more formidable position in AI chips by branching out into server CPUs.

Its entry into this lucrative market is probably one of the reasons why analysts are now anticipating a bigger increase in earnings.

NVDA EPS Estimates for Current Fiscal Year data by YCharts

Moreover, Nvidia remains significantly cheaper than both AMD and Intel.

INTC PE Ratio (Forward) data by YCharts

All this explains why investors looking to make the most of the fast-growing AI chip market will do well to continue holding Nvidia stock in their portfolios, as its stronger growth prospects and attractive valuation will pave the way for impressive upside.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Arm Holdings, Intel, and Nvidia. The Motley Fool has a disclosure policy.

Advanced Micro Devices (NASDAQ:AMD) stock has more than doubled in 2026. That's not surprising, as the chip designer's growth rate has been robust due to the improving demand for its server processors and its growing influence in the data center graphics card market.

The good news for AMD stock investors is that the company has been consistently gaining share in a fast-growing niche of the artificial intelligence (AI) chip space -- server central processing units (CPUs). The shift in AI data center compute from training to inference has sparked solid demand for server CPUs. As a result, AMD expects the total addressable market (TAM) for server CPUs to reach $220 billion in 2030, with a compound annual growth rate (CAGR) of 50% through the end of the decade.

More importantly, AMD is in a terrific position to make the most of this massive opportunity.

Image source: AMD.

AMD controls a nice chunk of the server CPU market

According to Mercury Research, AMD's unit share of the server CPU market increased by 7.2 percentage points year over year in Q2 to 34.5%. The semiconductor specialist's impressive growth came at Intel's expense.

The research firm notes that AMD's actual unit share is around 46.4%, as Intel also includes edge and networking processors in its data center and AI (DCAI) business segment. So, AMD's Epyc server processors are giving Intel's Xeon CPUs a run for their money. AMD's share gains in Q2 explain why its data center segment revenue increased 107% year over year to $6.7 billion.

Intel's DCAI revenue, on the other hand, was up by 59% from the year-ago quarter to $6.3 billion. AMD, therefore, seems to be outperforming Intel by a much bigger margin when their respective server CPU businesses are considered. Also, the significantly larger jump in AMD's data center business last quarter suggests that it is enjoying greater pricing power.

This trend has been seen in the past as well, with AMD's server CPU revenue share reportedly landing at 46% in Q1, while its unit share was closer to 33%. As such, AMD could be controlling around half of the server CPU market's revenue share in Q2.

I won't be surprised to see AMD gaining a bigger share of this space in the future due to its product development moves. But even if AMD maintains its 50% revenue share of server CPUs in 2030, its revenue from this segment could jump to $110 billion (based on the $220 billion TAM estimate noted earlier).

That's a pretty big number when we consider that AMD's data center segment has delivered $12.5 billion in revenue in the first six months of 2026, translating into an annual revenue run rate of $25 billion. So, server CPUs alone could boost AMD's data center revenue by more than 4x by 2030. However, the overall figure is likely much larger, given that it also sells graphics processing units (GPUs) for AI data centers.

The long-term growth prospects point to multibagger returns

The sunny prospects of the server CPU market explain why it isn't too late to buy this semiconductor stock, even though it trades at an expensive 64 times forward earnings. Analysts are forecasting an 81% increase in AMD's earnings per share in 2026 to $7.57, followed by a larger increase next year.

AMD EPS Estimates for Current Fiscal Year data by YCharts

What's more, AMD's earnings are anticipated to increase by 40% in 2028. However, don't be surprised to see the company doing better than that, as analysts have significantly increased their long-term earnings growth expectations from the company following its Q2 results.

AMD EPS LT Growth Estimates data by YCharts

Assuming AMD's earnings increase at 66% a year in 2029 and 2030, in line with the long-term consensus estimate, it could report earnings per share of $59.85 in 2030. Even if AMD trades at 30 times earnings in 2030, less than half its forward earnings multiple, its stock price could jump to $1,795. That's a potential jump of 3.9x in this AI stock.

AMD has a market cap of $750 million. So, the potential upside assumed above would be enough to send this high-flying stock well into the $2 trillion market cap club, and quite close to the $3 trillion mark. All this makes AMD a top growth stock to buy right now as it can become a multibagger over the long run.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool has a disclosure policy.

Memory demand has been outstripping supply due to the strong consumption of dynamic random-access memory (DRAM) and NAND flash storage chips by artificial intelligence (AI) data centers.

The memory crunch has been so acute that prices have climbed by a whopping 500% in just one year, as reported by Tom's Hardware. Importantly, the memory shortage won't be easing any time soon. Deloitte estimates that DRAM prices could jump 4x in 2026 despite efforts by memory manufacturers to bring additional supply online.

The favorable demand-supply dynamics have fueled outstanding growth in the revenue and earnings of Micron Technology and Sandisk. The good news for Sandisk and Micron stock investors is that the supply crunch may not ease until 2029 or 2030, according to Deloitte. This could pave the way for more upside in both stocks.

However, we are going to take a closer look at the prospects of Lam Research (NASDAQ:LRCX), a company that can win big from the memory supply crunch. Let's look at the reasons why this semiconductor stock will be a major beneficiary of the memory boom.

Image source: Getty Images.

Lam Research is a key player in the memory ecosystem

Deloitte estimates that the combined capital expenditure of memory manufacturers could jump from $58 billion in 2025 to $97 billion this year. That figure could increase to $146 billion in 2027. Meanwhile, the overall semiconductor industry's capex could hit $198 billion this year, followed by $260 billion in 2027.

These numbers bode well for Lam Research, as it sells semiconductor manufacturing equipment used by memory manufacturers, foundries, and integrated device manufacturers. The company gets 46% of its revenue from sales of memory equipment. This puts Lam Research right in the middle of the global memory boom.

Not surprisingly, Lam's revenue and earnings have been growing at a nice clip.

LRCX Revenue (TTM) data by YCharts

Lam reported a 26% increase in revenue in the recently concluded fiscal 2026 to $23.2 billion. Its earnings per share jumped by an even more impressive 39% to $5.76. The good news for Lam investors is that the company anticipates a solid uptick in growth rate this year. It projects a 52% year-over-year increase in revenue in the current quarter to $8.1 billion. Meanwhile, earnings per share are expected to soar by 71% from the year-ago quarter to $2.15.

So, it is easy to see why analysts are now expecting Lam Research to clock robust earnings growth over the long run.

LRCX EPS LT Growth Estimates data by YCharts

Don't be surprised to see that estimate move higher in the future. Deloitte notes that the new memory supply won't be coming online until 2029 or 2030, as building new memory manufacturing plants takes time. So, the ongoing supply crunch could worsen by then, creating demand for more equipment over the long run.

As such, Lam Research's healthy growth trajectory can continue over the long run.

Investors have a great opportunity to buy Lam stock on the dip now

Lam Research stock has jumped 76% in 2026, as of this writing. However, it has slipped 30% from the 52-week high it reached on June 30. So, savvy investors have a nice opportunity to buy this AI stock before it steps on the gas again, especially considering its improving earnings growth prospects.

Analysts predict a 62% jump in Lam's earnings per share in fiscal 2027 to $9.46. The forecast for the next couple of years suggests a nice bump in its bottom line.

LRCX EPS Estimates for Current Fiscal Year data by YCharts

However, Lam's growth could be much better than Wall Street anticipates, given that the memory crunch appears larger than expected. Memory manufacturers are likely to continue investing in equipment until the end of the decade to fill the supply gap. This could set Lam up for a bigger increase in earnings.

Assuming Lam's bottom line grows at an annual rate of 27% in the long run (based on the chart seen in the previous section), its earnings per share could increase to $19.38 per share after four years (using fiscal 2027's projected earnings of $9.46 per share as the base). If Lam stock trades at even 30 times earnings at that time (a discount to the tech-focused Nasdaq-100 index's earnings multiple of 34), its stock price could reach $581 in four years.

That's a potential 93% jump from current levels, which is why investors should consider buying Lam on the dip, as it could regain its mojo and soar higher.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lam Research and Micron Technology. The Motley Fool has a disclosure policy.

Shares of Intel (NASDAQ:INTC) have shot up impressively over the past year, rising 265%. So, an investment of $1,000 in Intel a year ago is now worth nearly $3,650, as of this writing.

The stunning rally in Intel stock has been fueled by a turnaround in the company's fortunes. It is becoming a key player in the artificial intelligence (AI) chip market, driven by the growing adoption of server central processing units (CPUs) for running agentic AI and inference workloads. However, the stock has run into rough weather lately.

Intel stock is down 37% after reaching a 52-week high on June 30. Should savvy investors consider capitalizing on this drop by buying this semiconductor stock in anticipation of further upside? Let's find out.

Image source: Intel.

Intel's accelerating growth points to a bright future

Intel released its second-quarter results in July. The company reported an impressive 25% year-over-year jump in revenue to $16.1 billion. What's more, Intel reported non-GAAP earnings of $0.42 per share compared to a loss of $0.10 per share in the year-ago period.

Intel management noted that this was the strongest revenue growth the company had reported in over 15 years. CEO Lip-Bu Tan attributed the semiconductor specialist's strong performance to robust demand for its AI chips, which has exceeded supply. Specifically, Intel saw a 70% year-over-year jump in its AI-focused revenue in Q2. Another important point is that its AI businesses now account for 70% of the top line.

The growing demand for server CPUs is one of the biggest factors driving Intel's healthy growth. The ratio of CPUs to graphics processing units (GPUs) used in AI data centers is projected to shift to 1:1 from 1:8 earlier. Intel management noted on the company's April earnings call that the CPU-to-GPU ratio has already shifted to 1:4. The company reported a 7% year-over-year increase in revenue in Q1, suggesting that the paradigm shift in the AI data center chip market toward CPUs is creating a solid tailwind for Intel.

Financial services firm Raymond James recently noted that the server CPU market could grow at an annual rate of 44% through 2030, generating $201 billion in revenue by the end of the forecast period. Intel controls 65% of the server CPU market, according to Mercury Research. The healthy growth opportunity in this market should allow Intel to sustain its outstanding growth for the next five years.

However, Intel isn't restricting itself to just the server CPU market. The company notes that its design services business, through which it designs and manufactures custom AI processors, saw a year-over-year revenue increase of nearly 3x in Q2. CFO David Zinsner noted on Intel's July earnings call that its custom ASIC (application-specific integrated circuit) business currently has an annual revenue run rate of almost $2 billion.

Zinsner predicts that this business could hit a $4 billion run rate "in the not too distant future." More importantly, Intel estimates that custom AI processors will open a total addressable market (TAM) worth more than $100 billion for the company.

So, Intel is riding a couple of solid catalysts that should fuel solid long-term growth. That's why, if you've $1,000 in investible cash right now, you can consider putting that money into this semiconductor stock before it steps on the gas once again.

Here's how much a $1,000 investment in Intel could be in 2030

Analysts expect Intel's earnings to grow by an impressive 260% in 2026 to $1.51 per share. Consensus estimates indicate that the company will continue clocking solid bottom-line growth over the next couple of years, with its earnings growth rate poised to accelerate in 2028.

INTC EPS Estimates for Current Fiscal Year data by YCharts

Even better, analysts have become bullish on Intel's long-term earnings growth rate this year, which isn't surprising given its catalysts.

INTC EPS LT Growth Estimates data by YCharts

Assuming Intel's earnings grow at even 50% a year in 2029 and 2030 (relatively conservative compared to the consensus estimate of 69%), it could report $6.68 in earnings per share in 2030.

The tech-laden Nasdaq-100 index has a forward earnings multiple of 24. The healthy bottom-line growth that Intel can clock through the end of the decade should ideally help it trade at a premium. Assuming it trades at 30 times earnings after five years and its earnings indeed reach $6.68 per share, this AI stock could jump to $200 by 2030.

That's a potential 127% jump, meaning a $1,000 investment in Intel could be worth almost $2,300 in 2030. So, investors can consider using Intel's recent dip to buy more shares, as it has the potential to make them significantly richer over the long run.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool has a disclosure policy.

SK Hynix (NASDAQ: SKHY) has got off to an indifferent start on the U.S. stock market since its listing on the Nasdaq in July, with the memory giant dropping 3% since its Nasdaq debut.

However, SK Hynix is one of the most important companies in the artificial intelligence (AI) infrastructure ecosystem. It controls a significant share of the memory market, an industry where demand has been significantly exceeding supply due to the build-out of AI data centers.

The outstanding memory demand and the resulting supply shortage have sent stocks of SK Hynix's peers, Micron Technology and Sandisk, soaring over the past year or so. I won't be surprised to see SK Hynix following suit, making this semiconductor stock an ideal fit for investors looking to build a million-dollar portfolio.

Let's look at the reasons why.

Image source: The Motley Fool.

SK Hynix's memory dominance will translate into phenomenal growth

The memory market's revenue has been soaring at an incredible pace. AI data centers require substantial compute and storage capacity to run AI workloads, which explains why demand for these chips has significantly outpaced supply.

As a result, memory prices have soared remarkably. Deloitte estimates that the price of dynamic random-access memory (DRAM) could jump by 4x in 2026. The consulting firm also notes that new memory capacity won't be coming online until 2029 or 2030, suggesting that the strong pricing environment is here to stay.

So, it is easy to see why market research firm TrendForce anticipates the DRAM market's revenue to rise from $153.6 billion last year to $618.7 billion in 2026. The firm expects another solid jump in 2027, projecting $903.3 billion in DRAM revenue.

Similarly, the need to store enormous amounts of data in AI data centers for training AI models and running inference applications has created a supply shortage in the NAND flash market. This explains why the NAND flash market's revenue is projected to jump from $71 billion last year to $270.6 billion in 2026. TrendForce expects growth to continue in 2027, with NAND flash industry revenue projected to reach $379.4 billion.

All this is great news for SK Hynix investors. After all, it enjoys 26% share of the DRAM market, according to Counterpoint Research. Meanwhile, SK Hynix's NAND flash market share is at a healthy 22%. Given that the overall memory market's revenue is poised to hit $1.28 trillion in 2027, SK Hynix is poised to sustain the impressive growth it has been clocking.

Data by YCharts

More importantly, SK Hynix's valuation suggests that the market isn't pricing the company's outstanding growth prospects in the stock price. That's why I think it looks like an ideal growth stock for anyone looking to build a million-dollar portfolio.

The stock deserves to trade at a premium valuation

We have already seen the impressive growth SK Hynix has been clocking. Moreover, the memory market's outlook explains why analysts have become bullish on the company's growth prospects.

Data by YCharts

SK Hynix's solid top-line growth will translate into a nice jump in its bottom line as well.

Data by YCharts

The chart above shows that analysts forecast SK Hynix's earnings to grow at a 20%-plus rate over the next couple of years. However, supply constraints and robust demand for memory could help it do better than that.

But even if SK Hynix's earnings grow in line with consensus estimates to $42.21 per share in 2028, it can deliver tremendous upside. That's because SK Hynix trades at just 6 times forward earnings. The tech-focused Nasdaq-100 index, for comparison, has a forward earnings multiple of 24. Ideally, SK Hynix should be trading at a significant premium to the index due to its terrific growth and sunny prospects.

However, even if this AI stock trades at a conservative 15 times earnings at the end of 2028, its stock price could reach $633 (based on the $42.21 earnings per share estimate). That's 3.8x its current stock price. If the market rewards SK Hynix with a premium valuation, it could surge even higher.

In the end, it is easy to see why SK Hynix stock seems worth buying for growth-oriented investors looking to build a million-dollar portfolio, as its cheap valuation and growth potential could make it a multibagger.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.

The demand for artificial intelligence (AI) data centers is exceeding supply, which isn't surprising, as major hyperscalers and AI companies are sitting on massive contractual backlogs that they need to fulfill.

Bank of America estimates that the combined backlog of Microsoft, Oracle, Amazon, and Google was worth a whopping $2.3 trillion at the end of the second quarter. That doesn't include the backlogs of other companies offering AI services in the cloud, suggesting that the actual number could be much higher.

Not surprisingly, dedicated AI data centers are in high demand, which explains the phenomenal growth that Nebius Group (NASDAQ:NBIS) and CoreWeave (NASDAQ:CRWV) have witnessed over the past year. Both companies delivered solid Q2 results and are on track to sustain healthy long-term growth.

However, if you have to choose one of these two AI stocks for your portfolio, which one should it be? Let's find out.

Image source: The Motley Fool.

CoreWeave and Nebius are built for solid long-term growth

CoreWeave and Nebius are neocloud infrastructure companies that build dedicated AI data centers equipped with high-end hardware, including graphics processing units (GPUs) and custom processors. They rent out their infrastructure to major hyperscalers and other customers looking to run AI services in the cloud.

The business model has been quite successful, as evident from the rapid revenue growth both companies have been clocking.

CRWV Revenue (TTM) data by YCharts

CoreWeave's revenue, for instance, shot up by 112% year over year in the second quarter of 2026 to $2.6 billion. Nebius' growth was even more fantastic, with its top line jumping by a whopping 454% year over year to $582 million. Don't be surprised to see both companies sustaining such fantastic growth rates over the long run.

That's because the neocloud infrastructure market is growing at an incredible pace. Synergy Research Group estimates that the neocloud infrastructure market generated $25 billion in revenue in 2025. It is expected to grow 16x by 2031, generating $400 billion in revenue at the end of the forecast period. That translates into a compound annual growth rate (CAGR) of 58%.

So, Nebius and CoreWeave are at the beginning of a terrific growth curve. Also, both companies have a solid backlog that should ensure outstanding growth in the long run. CoreWeave, for example, had a revenue backlog of $104 billion at the end of Q2, up 246% year over year. Though Nebius doesn't disclose its backlog, its figure could be close to $50 billion or more.

The backlogs indicate why analysts expect both companies to grow at a terrific pace in the future.

CRWV Revenue Estimates for Current Fiscal Year data by YCharts

In all, the secular growth of the neocloud infrastructure market will be a tailwind for Nebius and CoreWeave in the long run. However, there is a stark difference in their stock market performance so far this year.

While Nebius stock has surged 146% in 2026, CoreWeave stock has gained a paltry 18%, as of this writing. CoreWeave's poor returns can be attributed to the company's ballooning expenses. The company's loss per share increased by 90% year over year in the second quarter, driven by its aggressive AI infrastructure build-out.

Nebius, however, reduced its adjusted net loss by 64% to $33.2 million in Q2. Nebius' stronger bottom-line performance can be attributed to its software stack, as customers have been increasing the usage of its Token Factory to build AI models, run inference applications, and deploy AI models at scale, among other things.

So, does this make Nebius a better AI cloud stock than CoreWeave?

The verdict

Nebius' improving bottom-line performance makes it look like an attractive bet compared to CoreWeave. Also, Nebius is clocking a significantly faster growth rate. However, Nebius stock trades at a significantly expensive sales multiple.

CRWV PS Ratio data by YCharts

Meanwhile, CoreWeave has a stronger revenue backlog, providing greater visibility into its future. As such, investors seeking a mix of value and growth may consider buying CoreWeave despite its underperformance in 2026. But at the same time, even Nebius could deliver solid gains to investors over the long run, driven by its ability to deliver phenomenal growth.

So, investors can consider buying any of these two AI stocks for their portfolios depending on their risk profile, as both of them can soar impressively over the long run on the back of booming AI cloud infrastructure demand.

Bank of America is an advertising partner of Motley Fool Money. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Oracle. The Motley Fool has a disclosure policy.

The latest earnings season has been a solid one for artificial intelligence (AI) semiconductor companies, as healthy demand for data center infrastructure has driven impressive growth among chipmakers and chip designers.

This explains why the latest quarterly reports of Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) exceeded expectations. However, the market's attention will now turn to Micron Technology (NASDAQ: MU), which will release its fiscal 2026 fourth-quarter results on Sept. 30. While there is still some time to go before Micron releases its quarterly report, I think that this semiconductor stock could be the biggest mover among AI companies in September.

Let's look at the reasons why.

Image source: Micron Technology.

Nvidia and AMD's results clearly indicate that the AI trade is alive

The past couple of months have been turbulent for Micron stock investors. It has dropped 11% since releasing its fiscal Q3 results on June 24. However, recent results from AMD, Nvidia, and other semiconductor companies clearly indicate that AI infrastructure demand remains robust.

Nvidia reported a 106% year-over-year increase in revenue for the second quarter of fiscal 2027. What's more, the semiconductor bellwether notes that its revenue growth could land at a healthy 70% in fiscal 2028, well above the consensus estimate of 44%. However, Nvidia's growth could be stronger than that, as the company notes its forecast accounts for supply chain constraints.

AMD, on the other hand, posted a year-over-year jump of 50% in Q2 revenue. It projects a 41% increase in revenue for the current quarter. Importantly, AMD management believes that its long-term revenue could "grow substantially above our prior target of greater than 35%, and we expect to significantly exceed our $20 annual EPS target within our strategic timeframe."

AMD management also added that demand for high-performance computing could grow at an annual rate of 40% over the long term, presenting a $2 trillion revenue opportunity for chipmakers in 2030.

These sunny forecasts from AMD and Nvidia bode well for Micron. After all, Micron sells a critical component that helps the AI chips designed by Nvidia and AMD to perform tasks seamlessly. The dynamic random access memory (DRAM) chips that Micron manufactures help transport massive amounts of data rapidly to AI accelerators while maintaining low power consumption.

So, Nvidia and AMD's chips don't have to sit idle and wait for data, thanks to Micron's chips. Not surprisingly, these chip designers are packing large amounts of high-bandwidth memory (HBM) into their chips. Nvidia's NVL72 rack-scale server system carries more than 20 terabytes (TB) of HBM. AMD, on the other hand, is offering 31 TB of HBM on its Helios rack-scale system.

Strong shipments of these AI server racks should ensure that the demand for Micron's memory remains solid, especially because manufacturing HBM requires nearly 4x more wafer capacity over traditional memory chips. Also, Nvidia noted on the latest earnings call that the capital expenditures of the top five U.S. hyperscalers could increase from $800 billion this year to $1.3 trillion in 2027.

As such, the stage seems set for a strong rally in Micron stock in September, ahead of its earnings report. A big reason that's likely to be the case is its extremely attractive valuation.

Micron's valuation suggests that the stock is poised for a breakout in September

Micron is priced like a value stock even though it has been clocking exponential growth. Analysts are expecting its revenue to jump by a whopping 348% year over year in fiscal Q4 to $50.8 billion. Earnings per share, meanwhile, could increase by more than 10x year over year to $31.28.

However, Micron's price-to-earnings ratio is just 21, suggesting the market isn't pricing in its tremendous growth potential. The forward earnings multiple of 6 is even cheaper. For a company that's expected to clock triple-digit earnings-per-share growth over the long run, Micron's valuation clearly suggests that it could make a parabolic move.

Moreover, Micron is expected to clock significantly faster growth than Nvidia and AMD, and it is way cheaper than both.

Data by YCharts

All this makes Micron a top AI stock to buy right now, as September could bring about a turnaround in its fortunes.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ: NVDA) stock has underperformed the broader semiconductor sector index so far in 2026, gaining just 16% as of this writing, compared to the 62% spike in the PHLX Semiconductor Sector index.

However, shares of the semiconductor bellwether received a nice shot in the arm following the release of its fiscal 2027 second-quarter results (for the quarter ended July 26) on Aug. 26. Nvidia stock jumped nearly 9% the following day, driven by its better-than-expected results and impressive guidance.

I won't be surprised to see Nvidia sustaining its post-earnings momentum in September and head higher. Let's see where this semiconductor stock could be by the end of next month.

Image source: The Motley Fool.

Nvidia's post-earnings pop is sustainable

Nvidia's fiscal Q2 revenue jumped 106% year over year to $96.2 billion. Meanwhile, its non-GAAP earnings increased by 120% to $2.22 per share. The numbers trounced analysts' expectations of $2.09 in earnings per share on revenue of $92.3 billion.

The good news for Nvidia investors is that the phenomenal growth rate is sustainable. The $108 billion revenue forecast for the current quarter points to a potential year-over-year increase of 89%. It is worth noting that Nvidia reported a 62% revenue jump in the third quarter of fiscal 2026. However, the biggest takeaway from Nvidia's latest quarterly report was that it expects its robust growth momentum to continue beyond the current quarter.

CFO Colette Kress noted on the latest earnings call:

We expect to grow revenue by approximately 70% in fiscal 2028. This is a supply constrained outlook.

This forecast took the market by surprise. Analysts were expecting Nvidia's revenue to increase by 44% in fiscal 2028, following an 83% spike in fiscal 2027 to $397 billion. Not surprisingly, analysts have scrambled to increase their growth expectations following the latest results.

Data by YCharts

Even then, the fiscal 2028 revenue estimate shown above doesn't align with Nvidia's guidance. Analysts, therefore, are still underestimating Nvidia's growth potential, especially considering that its fiscal 2028 revenue forecast takes supply constraints into account. If Nvidia manages to build more capacity with its supply chain partners, I won't be surprised to see it clock stronger growth.

For example, Nvidia's foundry partner Taiwan Semiconductor Manufacturing has increased its 2026 capital expenditure guidance by $8 billion to $62 billion. That would be an increase of more than 50% from its 2025 capex of $40.9 billion. Additionally, TSMC has committed to spend another $100 billion to boost its manufacturing capacity in the U.S., on top of its earlier commitment of $165 billion.

The aggressive expansion by TSMC bodes well for Nvidia, putting the latter in a solid position to capitalize on the healthy artificial intelligence (AI) infrastructure spending environment. Nvidia notes that the cloud computing industry is sitting on a backlog of more than $2 trillion. As a result, the company believes that the capital expenditures of the top five hyperscalers in the U.S. could jump from $800 billion in 2026 to $1.3 trillion in 2027.

These positive developments should rub off positively on this AI stock in September, especially considering that it trades at a really attractive valuation.

Here's why the stock will keep soaring in September

Nvidia trades at 29 times earnings, a discount to the tech-focused Nasdaq-100 index's earnings multiple of 34. The stock's forward earnings multiple of 26 is slightly higher than the index's average multiple of 24. However, analysts are now anticipating a larger increase in Nvidia's earnings in fiscal 2027 to $9.29 per share. That's a potential increase of 95% over the prior year.

So, Nvidia should ideally be trading at a premium to the tech sector. Assuming it trades at 40 times earnings at the end of fiscal 2027 and its earnings per share reach $9.29, its share price could jump to $372 in six months. That's a potential 71% jump in a short time, which is why I think Nvidia stock will trade at a significantly higher level in September than it is right now.

Given that Nvidia trades at attractive multiples, investors should consider buying this AI pioneer before it surges higher in September.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

The artificial intelligence (AI) infrastructure juggernaut isn't slowing down, as major hyperscalers and AI companies continue to invest aggressively in data centers to satisfy strong demand for AI services.

This explains why AI chip bellwether Nvidia reported phenomenal results for the second quarter of fiscal 2027, with its revenue jumping 106% year over year. The market cheered the company's solid results, and Nvidia stock soared following its report.

Broadcom, another key AI chip supplier, will release its quarterly results after the market closes on Sept. 2. The company's improving growth trajectory and the solid opportunity in custom AI processors and networking can help Broadcom deliver solid results. So, don't be surprised to see Broadcom stock soar on Sept. 3 in the wake of its quarterly report.

However, there's another high-flying AI infrastructure stock that's going to release its quarterly results on Sept. 3. Ciena (NYSE: CIEN), which sells optical networking products, will report fiscal 2026 Q3 results on that day. The stock has already soared 62% this year, and there is a strong likelihood it will jump higher after its results. Let's look at the reasons why.

Image source: Getty Images.

Ciena can deliver phenomenal results once again

Ciena has crushed Wall Street's earnings expectations in each of the last four quarters. Investors can expect the trend to continue, as the demand for optical networking components has been going through the roof.

Goldman Sachs predicts that the total addressable market (TAM) of optical components could jump from $15 billion this year to $154 billion in 2028. Ciena is benefiting from this trend. The company has guided for $1.62 billion in revenue for fiscal Q3, representing a 33% increase from the year-ago period.

Additionally, it expects a non-GAAP adjusted operating margin of 19%-20%, nearly double the year-ago period's 10.7%. The terrific jump in Ciena's revenue, along with healthy margin expansion, explains why its earnings are anticipated to increase by 157% year over year to $1.72 per share.

However, don't be surprised to see Ciena outperforming Wall Street's expectations. That's because the demand for optical components has been exceeding supply, creating a shortage and resulting in higher prices. This explains the big jump that's projected in Ciena's margins. Not surprisingly, analysts expect Ciena's earnings per share to double year over year in the current quarter.

However, its outlook could be better than expected, driven by exponential growth in optical component sales over the next couple of years.

It isn't too late to buy this growth stock

Ciena trades at 47 times forward earnings. While that may seem expensive considering the Nasdaq-100 index's forward earnings multiple of 24, investors shouldn't forget the stunning earnings growth the company is clocking.

In fact, analysts have significantly increased their earnings growth expectations from Ciena this year, a trend that's likely to continue.

Data by YCharts

Also, strong results and outlook from Ciena could send this AI stock higher and inflate its valuation. That's why investors looking to capitalize on the next big bottleneck in AI infrastructure should consider buying its shares ahead of its earnings report.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom, Ciena, Goldman Sachs Group, and Nvidia. The Motley Fool has a disclosure policy.

Broadcom (NASDAQ: AVGO) stock may not have set the market on fire in 2026 with muted gains of 6% as of this writing, but its fortunes could change after Sept. 2.

The chip designer will release its fiscal 2026 third-quarter results after the market closes on Sept. 2. Let's look at the reasons why this semiconductor stock could get a big shot in the arm following its upcoming report.

Image source: The Motley Fool.

Broadcom's results and guidance should beat expectations

Broadcom anticipates $29.4 billion in revenue for fiscal Q3, which would be an 84% spike from the year-ago period. Analysts are forecasting a 92% increase in Broadcom's earnings per share to $3.24. However, a couple of factors suggest Broadcom could clock stronger growth.

The first is the phenomenal growth in the optical networking market, where demand is significantly outpacing supply. According to Goldman Sachs, the optical networking market's revenue could jump from $15 billion in 2026 to a stunning $154 billion in 2028. Broadcom sells multiple optical networking components, including fast-growing co-packaged optics (CPO) products.

Broadcom management notes that 40% of its AI chip revenue comes from networking products. It expects that mix to drop to 30% as sales of custom AI processors increase. The company anticipates $56 billion in AI chip revenue in 2026, which means that its networking business could generate around $17 billion in revenue this year (based on a 30% product mix).

The exponential growth that Goldman Sachs sees in the optical networking market could send Broadcom's networking revenue significantly higher. We have already seen other optical networking companies reporting phenomenal growth and crushing Wall Street's expectations by wide margins. So, don't be surprised to see Broadcom following suit.

The second reason why Broadcom could crush expectations is the growing demand for custom AI processors. OpenAI recently announced its first custom AI chip, called Jalapeño, which it will start deploying in its AI infrastructure this year. The AI lab has developed this chip with Broadcom. Importantly, OpenAI notes that it is already working on the next two generations of its in-house processor, which is good news for Broadcom.

So, Broadcom has solid catalysts that should help it deliver better-than-expected results and guidance, potentially triggering a big rally in the stock given its cheap valuation.

The stock is a no-brainer buy ahead of its earnings

Broadcom trades at just 19 times forward earnings. That's cheaper than the tech-focused Nasdaq-100 index's forward earnings multiple of 24. For a company that's expected to clock 70% earnings growth in the current fiscal year, along with an identical jump in the next one, buying Broadcom at this valuation is a no-brainer.

Broadcom may not be available at such an attractive multiple once it soars following its earnings report, which is why investors looking for a value stock to profit from the AI infrastructure boom should consider buying it right away.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom and Goldman Sachs Group. The Motley Fool has a disclosure policy.

An investment of $1,000 made in shares of Micron Technology (NASDAQ:MU) three years ago is now worth almost $15,000, which isn't surprising as the company has been benefiting from healthy memory chip demand that has created a supply shortage in the industry.

However, Micron stock has been pulling back lately. Investors have been rotating out of memory stocks, booking profits after a stellar run in this sector in recent months. The good news is that Micron's pullback has opened an opportunity for savvy investors to buy the stock at an attractive valuation.

If you've $1,000 in investible cash right now, putting that money into this semiconductor stock could be a profitable move, as Micron could surge impressively until the end of the decade. Let's look at the reasons why.

Image source: Micron Technology.

The memory boom isn't going anywhere

Micron Technology released fiscal 2026 third-quarter results (for the quarter ended May 28) on June 24. The company's revenue increased by 346% year over year to $41.45 billion. Meanwhile, non-GAAP earnings per share rose more than 13x year over year to $25.11.

The simplest reason behind this phenomenal surge was the favorable demand-supply environment in memory chips. Artificial intelligence (AI) data centers consume enormous amounts of compute and storage memory chips to ensure AI workloads run seamlessly. The good news for Micron investors is that the supply deficit won't be going away until the end of the decade.

Equity research provider Citrini Research (via PC Gamer) predicts that the supply deficit in dynamic random-access memory (DRAM) will increase from the current 18% to nearly 25% by 2030. The research firm notes that DRAM demand could hit 157.5 exabytes (EB) in 2030, exceeding supply by 28.7 EB. The firm adds that the proliferation of agentic AI and the need for high-bandwidth memory (HBM) will be key factors behind demand exceeding supply.

Citrini's forecast is consistent with what memory specialist SK Hynix noted earlier this year. The South Korean giant estimates that wafer supply will be at least 20% below demand over the next four to five years.

So, Micron's biggest catalyst -- higher memory prices -- seems sustainable until the end of the decade. Importantly, Micron has entered into multi-year agreements with customers to capitalize on the growing memory demand. The company reported having 16 strategic customer agreements (SCAs) at the end of fiscal Q3, spread across the data center, automotive, and consumer end markets.

Management notes that these SCAs typically have a five-year term, running until the end of 2030. Meanwhile, the automotive agreements have a three-year term. Micron says that it will sell 20% of its DRAM volume and one-third of its NAND flash volume through these SCAs. An important point to note is that 14 of these SCAs will generate at least $100 billion in revenue for Micron over the remainder of the agreement period.

Given that Micron still has capacity to sell even after signing these SCAs, it is well-positioned to capture the secular growth of the memory market. Not surprisingly, analysts are bullish about Micron's growth prospects, expecting its top line to more than double in just two fiscal years.

MU Revenue Estimates for Current Fiscal Year data by YCharts

Micron can make investors significantly richer by the end of the decade

Micron's fiscal year 2026 will end this month. The company's earnings are expected to jump by a whopping 785% in the fiscal year to $73.40 per share. Importantly, consensus estimates project a nice jump in Micron's earnings in fiscal years 2027 and 2028.

MU EPS Estimates for Current Fiscal Year data by YCharts

We have already seen that the favorable pricing environment will continue until the end of the decade. So, I won't be surprised to see Micron clocking double-digit earnings growth in fiscal 2029 and fiscal 2030. Assuming its bottom line grows at even 10% annually in those two years, its earnings per share could reach $206.55 in 2030.

Micron trades at 6 times forward earnings. That's well above the S&P 500 index's forward earnings multiple of 21. Assuming Micron trades at even 15 times earnings in 2030 and achieves $206.55 in earnings per share, its stock price could jump to $3,098. That's almost 3.4x its current stock price.

So, an investment of $1,000 in this AI stock could be worth more than $3,000 by 2030, which is why investors can consider buying Micron before it steps on the gas once again.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.

Applied Digital (NASDAQ:APLD) stock has been on a roller-coaster ride this year. However, the past few months have been quite painful for this artificial intelligence (AI) infrastructure specialist.

Applied Digital stock has pulled back 45% from the 52-week high it reached almost three months ago. However, a closer look at the company's surging growth and the bright prospects of the AI data center infrastructure market suggests that the recent pullback in this stock could be a buying opportunity.

Let's look at the reasons why.

Image source: Getty Images.

The market is underestimating Applied Digital's growth potential

Applied Digital is in the business of designing, building, and operating data centers designed to handle AI and high-performance computing (HPC) workloads. This puts the company right in the middle of a lucrative growth opportunity.

Market research firm Dell'Oro Group estimates that global spending on AI data centers could exceed $3 trillion by the end of the decade, driven by the need to support the growth in AI workloads in the cloud. What's worth noting is that Dell'Oro has almost doubled its data center capex outlook for 2030 since January 2026.

It won't be surprising to see this estimate move higher in the future, as more companies integrate AI into their operations to unlock productivity gains. A report released by workplace advisory services provider Gallup earlier this year noted that 65% of employees using AI in organizations have reported a jump in productivity.

So, the massive addressable market that Applied Digital is poised to capitalize on could get even bigger in the future. The good news is that the company is positioning itself to capitalize on the tremendous opportunity in this market. The company posted a 167% increase in revenue in fiscal 2026 (ending May 31) to $611 million. Importantly, it also reduced its diluted loss per share by 22%.

Applied Digital's growth rate could accelerate substantially in the future, given its robust lease revenue pipeline. Applied Digital has leased out 1.4 gigawatts (GW) of data center capacity across its five data center campuses. The company estimates that these leases will generate $36 billion in lease revenue across 15 years under the base contractual term.

Importantly, Applied Digital has started delivering the data center capacity, which will help it convert the lease revenue pipeline into actual revenue. The company estimates that it will complete delivery of the entire 1.4 GW of the contracted data center capacity by the second half of 2028. What's more, Applied Digital notes that the renewal options included in these lease contracts could take its potential long-term lease revenue to an impressive $86 billion.

But even if Applied Digital's customers don't exercise the renewal options, which seems quite unlikely amid the booming data center demand, its annual revenue run rate could be around $2 billion over the next 15 years. That's a conservative estimate, as the company is looking to add new data center campuses, in addition to increasing capacity at existing campuses.

So, Applied Digital's top line could jump substantially from its fiscal 2026 levels, and that's precisely what analysts are expecting.

APLD Revenue Estimates for Current Fiscal Year data by YCharts

The terrific top-line growth will send the stock soaring

The $2.72 billion revenue estimate for fiscal 2029 points to a jump of almost 4x in Applied Digital's top line from fiscal 2026 levels. Such impressive growth explains why this AI stock is trading at a relatively expensive 12 times sales, while the U.S. tech sector has an average sales multiple of 7.4.

The good news is that the recent pullback in Applied Digital stock has made it relatively inexpensive to buy right now, as it was trading at over 38 times sales at the end of May. Assuming Applied Digital trades at the U.S. tech sector's average sales multiple after three years and its revenue reaches $2.72 billion in fiscal 2029, its market cap could increase to $20 billion.

That's a potential upside of 156% from current levels. So, investors looking to buy a top growth stock to capitalize on the AI data center boom should consider using the pullback in Applied Digital to buy more shares before it goes on a bull run.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Sandisk and Micron Technology have been the biggest beneficiaries of the artificial intelligence (AI)-fueled memory boom. The demand for their memory products has exceeded supply by a wide margin, which explains the solid jump in revenue and earnings for both companies.

However, the memory trade isn't just restricted to Sandisk and Micron. There are other companies that stand to gain from the secular growth of the memory market in the long run. Semiconductor bellwether ASML Holding (NASDAQ: ASML) is one such company that can win big from the healthy memory demand.

Let's see why I think that ASML could be a better way to play the memory market compared to Sandisk or Micron.

Image source: ASML.

ASML's memory business is growing at a solid clip

ASML makes advanced chipmaking equipment that helps foundries, memory manufacturers, and integrated device manufacturers (IDMs) to make cutting-edge chips. The memory industry is now a major catalyst for ASML, which isn't surprising, given the incredible demand for these chips.

ASML management noted on the July earnings call that memory accounted for 49% of its system sales in Q2. What's more, ASML sees a 75% increase in its memory-related net system sales in 2026. The company credits this big bump in memory sales this year to the additional capacity being brought online to support the healthy demand for high-bandwidth memory (HBM) and dynamic random-access memory (DRAM).

There is an acute shortage of these memory chips due to their mission-critical role in AI data centers. Micron, for instance, noted in February that it has sold out its 2026 HBM capacity. Micron's customers are now entering into multi-year supply agreements with the company to secure long-term capacity in advance to support their AI infrastructure build-out.

This is encouraging Micron and its peers to invest in more memory manufacturing equipment. Not surprisingly, Deloitte estimates that the capital expenditures of major memory manufacturers could jump by 67% this year to $97 billion. The consulting firm anticipates another increase of 50% in memory capex in 2027 to $146 billion.

So, the strong memory capex environment that's powering ASML's growth this year will continue into 2027. Importantly, memory demand is anticipated to exceed supply until the end of the decade, indicating that the memory market will remain a key growth driver for ASML. This is one of the reasons why analysts have become more bullish about ASML's long-term earnings growth prospects following its quarterly report last month.

Data by YCharts

Why this Dutch giant could be a bigger winner than Micron and Sandisk

ASML is the only supplier of extreme ultraviolet (EUV) lithography machines, which are used for printing advanced microchips. Memory makers have been using EUV machines to reduce production costs and make more advanced memory chips with higher computation power and improved energy efficiency.

So, ASML can charge a premium for its EUV lithography machines given its monopolistic position in this market. Now, ASML's profit margin is significantly lower than that of Sandisk and Micron. ASML's pricing power can boost the company's margin profile, while Micron and Sandisk may find it difficult to achieve further gains due to their already-strong margin levels.

Data by YCharts

As such, I won't be surprised to see this semiconductor stock outperforming Micron and Sandisk due to the central role it plays in the memory market's expansion.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Micron Technology. The Motley Fool has a disclosure policy.

The memory trade on Wall Street has been cracking lately, as investors have been booking profits and rotating out of memory stocks following a phenomenal surge in this sector over the past couple of years.

The Roundhill Memory ETF, an exchange-traded fund that invests in major memory companies across the globe, has lost 27% of its value over the past couple of months. However, the recent downturn in memory stocks may not last long, as artificial intelligence (AI) has become a durable growth driver for the industry.

This is what Micron Technology (NASDAQ: MU) CEO Sanjay Mehrotra recently told CNBC in an interview. Let's take a closer look at Mehrotra's comments and check why they point toward better times for the memory industry in the long run.

Image source: Getty Images.

The memory industry is out of its boom-and-bust cycle

The memory business has been cyclical in the past. The industry's demand and supply dynamics have historically been dictated by sales of smartphones and personal computers (PCs). So, whenever demand for these consumer devices weakened, the industry faced oversupply.

AI, however, has changed that. Mehrotra told CNBC that AI infrastructure won't work without memory. That's not surprising, as memory doesn't just help AI data centers store massive amounts of data, but also to transfer enormous data sets rapidly to accelerator chips, such as custom AI processors and graphics cards, so that they can perform complex calculations quickly.

The mission-critical nature of memory chips in AI infrastructure has changed the industry's dynamic. The Micron CEO notes that its customers are buying everything that the company can manufacture. Specifically, memory demand from data center customers exceeds supply by 50%. At the same time, Micron sees strong memory demand emerging from other applications, such as autonomous vehicles, edge AI devices, and robots.

Additionally, the smartphone and PC markets are currently struggling due to high memory prices stemming from a supply shortage. All this suggests a structural change in the memory market. The importance of the dynamic random-access memory (DRAM) and NAND flash chips that Micron sells in multiple industries has brought the memory industry out of its boom-and-bust cycles.

Now is a good time to buy Micron and other memory stocks

Mehrotra's comments indicate that the recent slump in memory stocks shouldn't last for long. So, now seems like a good time for savvy investors to add some top growth stocks to their portfolios. It is worth noting that popular memory stocks are now trading at attractive multiples.

Data by YCharts

The tech-focused Nasdaq-100 index, for comparison, has a forward earnings multiple of 24. The solid earnings growth that Micron, Sandisk, and SK Hynix can deliver over the long run makes them no-brainer buys at these multiples.

As such, investors looking to add top stocks benefiting from the AI infrastructure boom will do well to take a closer look at the memory sector before it steps on the gas once again.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.

The demand for artificial intelligence (AI) software is rising rapidly, with Gartner projecting a 60% increase in AI software spending this year to $453 billion, followed by a 41% jump next year to more than $638 billion.

This terrific growth isn't surprising, as integrating AI-focused software tools into business operations is boosting productivity. A Morgan Stanley research report noted earlier this year that companies using AI for at least a year have experienced an 11.5% increase in productivity. Not surprisingly, companies such as Palantir Technologies and SoundHound AI that sell enterprise AI software solutions have been experiencing healthy revenue growth.

However, both stocks have been underperforming this year. While Palantir stock is down 3% in 2026, SoundHound AI has dropped 29%. Cloud communications specialist Twilio (NYSE:TWLO), meanwhile, has clocked impressive gains of 57% in 2026, driven by growing demand for its AI tools.

Let's see why that has been the case, and check if Twilio can sustain its impressive rally in the future and make investors richer.

Image source: The Motley Fool.

Twilio's AI tools have improved its growth trajectory

Twilio released its Q2 results on Aug. 6. The company's revenue increased 22% year over year to $1.5 billion. Its organic revenue increased by 17% year over year. What's more, Twilio reported non-GAAP earnings per share of $1.47, up by 23% from the year-ago period.

There's no doubt that Twilio's growth is nowhere near the phenomenal performance of SoundHound and Palantir, but it has been stepping on the gas lately. For instance, its revenue increased by 13% year over year in the same quarter last year. The improvement in Twilio's growth rate is driven by increasing adoption of its AI solutions.

The company has traditionally provided application programming interfaces (APIs) that help its clients stay in touch with their customers across various channels, including voice, text, email, chat, and video. However, it has now expanded beyond its core business, offering clients AI tools to predict customer behavior, build AI agents and conversational AI solutions, automate workflows, and improve security.

The good news is that these offerings are becoming popular among customers. For example, an automotive fintech company that used Twilio's conversational AI platform to build an AI assistant has witnessed a 1.6x jump in lead conversion. This client signed a seven-figure deal with Twilio to implement its conversational AI offerings.

Importantly, this wasn't the only customer deploying Twilio's AI offerings. Management noted on the earnings call that it has "signed an 8-figure deal with a leading AI company and other key wins with All Nippon Airways, Atlassian, Eltropy, Kixie, Lirio, Medibank, Olo, OpenEvidence, Orionai Solutions, Vozzi and Xplor Technologies."

Another important point to note is that Twilio isn't just winning new customers. Its existing customers are also spending more on its services. This is evident from the increase in the dollar-based net expansion rate, which compares customer spending in a quarter to that of the same customer cohort in the year-ago period..

Twilio's dollar-based net expansion rate increased by eight percentage points year over year in Q2 to 116%. Additionally, increased spending by existing customers is improving the company's profit margin.

TWLO Profit Margin data by YCharts

Moreover, Twilio's guidance suggests that it expects its solid growth trajectory to continue. The company has raised its full-year revenue growth guidance to a range of 18% to 18.5%, up from the earlier range of 14% to 15%. Not surprisingly, even analysts have become bullish about Twilio's growth prospects.

TWLO Revenue Estimates for Current Fiscal Year data by YCharts

The valuation makes Twilio a solid AI pick

Twilio trades at an attractive 6.3 times sales despite its impressive rally in 2026. Its price-to-earnings ratio of 31 isn't expensive either, given the expensive multiple Palantir trades at.

TWLO PS Ratio data by YCharts

The chart given above makes it clear that Twilio is a value play right now. It is delivering robust growth and is significantly cheaper than its peers that command significant premiums. Assuming Twilio's revenue indeed increases to $7.34 billion in 2028, and it trades at even 10 times sales at that time, which will be a significant discount to its peers, its market cap could jump to $73 billion.

That's just over double Twilio's current market cap. On the other hand, the expensive valuations of Palantir and SoundHound AI could weigh on their performance, which is why I think Twilio could be the better AI stock to buy among the three companies discussed in this article.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies, SoundHound AI, and Twilio. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

Artificial intelligence (AI) data centers require substantial storage capacity, which isn't surprising, as they must train large language models (LLMs) with billions or trillions of parameters using enormous amounts of data.

Also, running inference applications means that data centers need to be ready with massive data sets to fall back upon and answer user queries. Not surprisingly, AI data centers have been cornering the global storage supply, creating a major shortage of hard-disk drives (HDDs) and NAND flash-based solid-state drives (SSDs).

Micron Technology and Sandisk have been the major beneficiaries of the booming demand for storage solutions in AI data centers. Both semiconductor stocks have been enjoying healthy growth in revenue and earnings, driven by the solid demand for their NAND flash storage chips. However, there is another company that sells data storage devices and has clocked outstanding gains of 465% over the past year.

I am talking about Western Digital (NASDAQ:WDC), which has been experiencing outstanding growth in revenue and earnings, and trades at an attractive valuation right now.

We will take a closer look at Western Digital's prospects in this article and check why this data storage company can soar even higher following its red-hot rally over the past year.

Image source: Getty Images.

Western Digital's terrific growth is sustainable

Western Digital released its fiscal 2026 fourth-quarter results (for the period ended July 3) on Aug. 5. The company's revenue increased 36% during the year to $12.9 billion. Meanwhile, the favorable demand-supply dynamics in the storage industry boosted Western Digital's margins. Its non-GAAP operating margin increased by almost 13 percentage points in fiscal 2026 to 37.3%.

As a result, the company's adjusted earnings per share increased by 104% last year to $10.22. The good news for Western Digital investors is that its growth rate is poised to get better. The company anticipates $4.1 billion in revenue in the current quarter at the midpoint of its guidance range, which would be a 45% increase over the year-ago period.

The non-GAAP earnings per share guidance of $4.00 indicates a year-over-year increase of 125%. More importantly, Western Digital can sustain such impressive growth levels beyond the current quarter. The company noted in February that it had already sold out its HDD capacity for 2026. And now, management noted on the August earnings call that it is discussing long-term supply agreements with customers for 2029, 2030, and even 2031.

This suggests that customers are looking to secure long-term storage supply to support the build-out of AI data centers. Meanwhile, the favorable pricing environment fueling Western Digital's bottom-line growth also seems sustainable. Morgan Stanley estimates that the HDD supply cycle will lengthen, at least through 2028. So, there is a good chance that supply constraints will worsen, enabling Western Digital to capitalize on further price increases.

The investment bank adds that annual HDD demand growth of 40%-50% is outpacing the 30%-35% annual increase in supply. As a result, the price per terabyte for high-capacity nearline storage drives deployed in data centers could jump from around $15 currently to $25-$30 within the next three years.

So, it is easy to see why analysts expect this tech company to deliver solid earnings growth.

WDC EPS Estimates for Current Fiscal Year data by YCharts

The stock's valuation suggests that it is primed for a big jump

The chart above shows us that analysts expect Western Digital's earnings to jump by nearly 4.5x between fiscal 2026 and fiscal 2029. However, Morgan Stanley analysts are even more ambitious, predicting that Western Digital's earnings per share could jump by 10x between 2025 and 2028.

But even if Western Digital's earnings grow in line with consensus estimates to $44.83 per share in three years, this AI stock could jump to $1,165 (assuming it trades in line with the Nasdaq-100 index's forward earnings multiple of 26 at that time). That's 165% higher than Western Digital's current stock price.

Another point worth noting is that Western Digital is trading at just 17 times earnings. This makes this tech stock a no-brainer buy, especially given its phenomenal earnings growth potential, which could lead to a premium valuation in the long run and help it deliver much bigger gains than I have assumed above.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Western Digital. The Motley Fool has a disclosure policy.

Shares of SoundHound AI (NASDAQ:SOUN) have slipped close to 30% in 2026, as of this writing, but the provider of conversational artificial intelligence (AI) solutions received a major shot in the arm this month following the release of its second-quarter results on Aug. 5.

SoundHound AI stock popped more than 10% the day following its earnings release. The company increased its full-year guidance owing to the growing traction of Oasys, which it claims is the world's first self-learning agentic AI platform that helps customers build and deploy AI agents that can evaluate and improve on their own.

We will take a closer look at SoundHound's prospects in this article and see why this fast-growing tech company could significantly enhance investors' wealth through the end of the decade.

Image source: The Motley Fool.

SoundHound AI is targeting lucrative markets

SoundHound AI reported a 45% year-over-year increase in Q2 revenue to $62 million. The company noted on the earnings call that its revenue in the previous quarter was 10x higher than in the same quarter four years ago, underscoring how quickly it has been growing.

The good news for SoundHound investors is that the conversational AI market it operates in is estimated to grow at an annual pace of 24% through 2033, according to Grand View Research. The market size is estimated to jump from $17.7 billion in 2026 to nearly $79 billion by the end of the forecast period.

SoundHound's growth rate suggests that it is cornering a bigger share of this market. Importantly, the company's acquisitions and product development moves should ideally ensure it continues to gain share in this fast-growing niche. SoundHound management noted in its recent press release that the enterprise adoption of Oasys is playing a central role in boosting growth.

SoundHound management points out that it "signed an eight-figure commitment in less than 90 days from the initial demo to contract signature," which is impressive, given that Oasys was launched just three months ago. It is easy to see why Oasys has gained significant traction in the market. The agentic AI platform can be deployed in call centers, vehicle infotainment systems, restaurants, hospitality, retail, drive-thru chains, and other applications.

SoundHound believes Oasys could help it capitalize on the overall agentic AI software market, which the company notes could be worth a whopping $1 trillion in 2030, according to Gartner. In all, SoundHound is poised to capitalize on two durable catalysts: conversational AI and agentic AI.

Importantly, the company is focused on expanding its wings further in conversational AI with the acquisition of LivePerson, which it expects to close by the end of 2026. LivePerson seems like an ideal fit for SoundHound, as it enables enterprise customers to build conversational AI solutions, such as voice assistants, and helps them stay in touch with their clients across various channels.

SoundHound's acquisition of LivePerson should unlock another major growth opportunity for the company, enabling it to target the lucrative cloud communications market. Mordor Intelligence estimates that the cloud communications market could grow from $23.5 billion in 2026 to $45.6 billion in 2031.

In all, it is easy to see why analysts have become bullish about SoundHound's growth prospects for 2026 and 2027.

SOUN Revenue Estimates for Current Fiscal Year data by YCharts

However, they seem to be underestimating its growth potential. SoundHound expects $245 million in revenue in 2026 at the midpoint of its guidance range. That would be a 45% jump over last year. Also, the forecast for 2027 points toward a significant slowdown in growth, which seems unlikely considering SoundHound's expansionary moves, growing customer base, and the secular growth of the conversational AI market.

Stronger growth should send this stock soaring by the end of the decade

We have seen that SoundHound AI is outpacing the 24% annual growth rate projected for the conversational AI market. Also, the company's foray into the cloud communications space is another reason why we can expect it to easily outperform consensus expectations over the long run.

Assuming SoundHound's revenue grows at 45% between 2027 and 2030 (in line with its projected growth in 2026), its top line could reach $1.1 billion by the end of the decade. If this AI stock trades at 8 times sales at that time, almost in line with the U.S. tech sector's average sales multiple, its market cap could reach $8.8 billion.

That's 2.8x SoundHound's current market cap, which will be enough for this tech stock to reach a price of $20 by 2030. So, investors looking to buy and hold a top AI stock for the long run can consider adding SoundHound to their portfolios, considering its healthy upside potential.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SoundHound AI. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

Micron Technology (NASDAQ:MU) stock has risen by a stunning 981% since the beginning of 2025, as investors have been buying its shares hand over fist to capitalize on the artificial intelligence (AI)-fueled memory boom.

However, Micron stock has been witnessing turbulence lately. Investors have been booking profits in memory stocks amid concerns that the boom may not last forever, especially as memory manufacturers scramble to add new capacity to satisfy the enormous end-market demand. As a result, investors may now be wondering if it is too late to buy shares of Micron following its massive rally since the beginning of 2025.

We will try to answer that question in this article.

Image source: Getty Images.

Micron's margin growth is slowing down

Micron should ideally trade at an expensive valuation following its remarkable surge. However, that's not the case. The stock trades at just 22 times trailing earnings, while the forward earnings multiple of 6 makes buying it a no-brainer. Even the price-to-sales ratio of 12 isn't all that expensive when compared to the U.S. tech sector's average of 7.4.

After all, Micron's revenue jumped by almost 4.5x year over year in the previous quarter to $41.5 billion, while adjusted earnings shot up by 13x to $25.11 per share. Micron, therefore, is trading at a big discount right now despite its phenomenal growth. The tech-laden Nasdaq-100 index has a trailing earnings multiple of 34 and a forward earnings multiple of 24.

So, Micron looks like a screaming buy based on its valuation alone. However, the burning question on investors' minds right now is whether Micron can sustain such solid growth, especially given that its non-GAAP operating margin reached 81.2% in the third quarter of fiscal 2026. That was a big jump from the year-ago period's reading of 26.8%.

The fact that Micron's operating margin now sits at more than 80% is probably creating doubt among investors about the company's ability to sustain its stunning earnings growth rate. The company anticipates its non-GAAP gross margin to grow by just over one percentage point sequentially in the fiscal fourth quarter to 86%. For comparison, it clocked a 10-percentage-point sequential increase in this metric in fiscal Q3.

This explains why analysts anticipate Micron's earnings growth rate will eventually slow in fiscal 2028 (which begins in September next year).

MU EPS Estimates for Current Fiscal Year data by YCharts

This potential slowdown in Micron's margin growth is indeed a concern for anyone looking to buy this semiconductor stock right now. However, investors are overlooking a key factor that could help it sustain strong growth over the long run.

Secular memory demand will be a tailwind for the stock

The outstanding increase in Micron's margins has been fueled by robust memory demand that has been significantly outstripping supply. The good news for Micron investors is that memory demand is likely to continue exceeding supply until the end of the decade. Citrini Research estimates that global dynamic random-access memory (DRAM) supply will fall short of demand by 28.7 exabytes (EB) in 2030.

So, the strong pricing environment that has been fueling solid growth in Micron's revenue and earnings isn't going away any time soon. Of course, the company's margins are already at elevated levels, but it can continue to enjoy healthy sales volumes and pricing, which should boost its revenue and earnings. Also, the new supply that comes online will go toward satisfying pent-up demand in the smartphone and personal computer (PC) markets, where sales are dropping due to a shortage of memory supply.

Smartphone shipments, for instance, are anticipated to drop by 14% this year. Meanwhile, the PC market's shipments will only recover from 2028, according to IDC. Also, the long-term supply agreements that Micron is entering into should ensure that it continues to clock healthy revenue growth over the long run.

Micron had 16 long-term agreements at the end of fiscal Q3. It noted that 14 of those agreements will help generate at least $100 billion in revenue over the contract term. That's why analysts have become bullish on its top-line growth prospects.

MU Revenue Estimates for Current Fiscal Year data by YCharts

Moreover, Micron has a 12-month median price target of $1,600, according to 57 analysts covering the stock. That suggests potential upside of 75%. What's more, almost all the analysts rate the stock as a buy. If Micron continues to outperform analysts' expectations, it can indeed hit Wall Street's price target in the coming year.

Also, the stock's cheap valuation suggests healthy upside potential given the strong earnings growth it could deliver. All in all, it isn't too late for investors to buy this high-flying tech stock, as it will continue to benefit from the secular growth of the memory market.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.

Taiwan Semiconductor Manufacturing (NYSE:TSM) has clocked respectable gains of 35% on the stock market in 2026 so far. However, the foundry giant's returns pale in comparison to the 61% spike in the PHLX Semiconductor Sector index this year.

Popularly known as TSMC, the Taiwan-based foundry and semiconductor packaging specialist is one of the world's most important companies. It manufactures chips for tech giants such as Nvidia (NASDAQ:NVDA), Qualcomm, Apple, Advanced Micro Devices, Sony, and many others. Importantly, TSMC has been growing at a robust pace this year, clocking a 37% increase in revenue in the first seven months.

Nvidia, one of TSMC's most important customers, will report its quarterly results after the market closes on Aug. 26. There is a solid chance that Nvidia's report will give TSMC stock a big boost. Let's see why that may be the case.

Image source: TSMC.

Nvidia is set to deliver a blockbuster quarter, and that's good news for TSMC

Nvidia is expected to account for more than 20% of TSMC's revenue this year, according to Taiwan-based newspaper Economic Daily News. The chip giant is TSMC's largest customer.

Nvidia will start shipping its latest generation Vera Rubin artificial intelligence (AI) chip systems to customers in the second half of 2026. The production of these chips is predicted to ramp up significantly over the next couple of years, according to third-party reports. And now, Bloomberg reports that Nvidia could raise prices of its AI chips by more than 15%.

Nvidia CEO Jensen Huang remarked earlier this year that the company has a massive order book worth a whopping $1 trillion for its Blackwell and Vera Rubin chips for 2026 and 2027. Also, Nvidia's entry into the stand-alone server processor market has opened another phenomenal growth opportunity for the company.

So, there is a strong possibility of Nvidia's quarterly numbers crushing Wall Street's expectations on Aug. 26. The company anticipates $91 billion in revenue for fiscal Q2, which will be a record. Its top line is on track to increase by 95% year over year, indicating an acceleration from its fiscal Q1 revenue growth of 85%.

The company's healthy order book, the arrival of a new generation of chips, and potential price hikes suggest its guidance could be better than Wall Street has penciled in. Consensus estimates project an 82% year-over-year increase in Nvidia's revenue in fiscal Q3, to another record high of $103.8 billion. However, we have already seen that Nvidia's growth rate is picking up this year, and the catalysts discussed above could help it sustain that trajectory.

Nvidia's strong showing should have a positive impact on the semiconductor sector, especially TSMC. Financial newspaper Nikkei Asia reported last month that TSMC could increase the price of its foundry services by 10% in 2027. Bloomberg's report that Nvidia is planning a 15% price hike suggests that TSMC will indeed charge more for its chipmaking services.

As a result, I won't be surprised to see TSMC's growth rate accelerating. The following chart shows that analysts have been gradually increasing their revenue expectations for TSMC.

TSM Revenue Estimates for Current Fiscal Year data by YCharts

Also, the potential price hikes TSMC is reportedly set to implement should ideally lead to a robust increase in its bottom line. So it is easy to see why the company's earnings-per-share expectations have been rising.

TSM EPS Estimates for Current Fiscal Year data by YCharts

Here's why TSMC seems primed for a bull run

Analysts are expecting a 59% increase in TSMC's earnings per share in 2026 to $16.90. However, the previous chart indicates that the growth rate could drop in 2027 before it steps up in 2028.

However, TSMC can outperform market expectations. The AI chip market's revenue is poised for a major jump by 2030, which should help TSMC sustain its robust growth, as it is the world's leading foundry. Not surprisingly, there has been a sharp jump in TSMC's long-term earnings growth expectations.

TSM EPS LT Growth Estimates data by YCharts

Assuming TSMC's earnings increase at an annual rate of 35% over the next five years, its earnings per share could reach $47.75 per share in 2030 (using 2025's earnings per share of $10.65 as the base). If this AI stock trades at 24.1 times earnings at that time (in line with the tech-laden Nasdaq-100 index's forward earnings multiple), its price could jump to $1,150.

That's 182% above its current stock price, suggesting TSMC could make investors significantly richer over the long run. That's why it would be a good idea to buy this semiconductor stock ahead of Nvidia's report, as strong results from its biggest customer could trigger a bull run.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Memory chip demand has been exceeding supply thanks to artificial intelligence (AI) data centers, and that's not surprising, as memory helps solve a key bottleneck that can impede the performance of AI data center chips.

AI accelerators, such as graphics cards, server processors, and custom chips, are known for their fast processing speeds. As a result, they require quick access to huge amounts of data, and that's made possible by integrating fast memory chips into AI accelerators. This is why Micron Technology has been experiencing phenomenal growth in demand for its high-bandwidth memory (HBM).

The good news for Micron investors is that memory demand is expected to outstrip supply until the end of the decade. Citrini Research, a firm that provides insights on equity trading and macro trading, predicts that dynamic random-access memory (DRAM) demand could exceed supply by 25% in 2030. Micron stock, therefore, is likely to continue benefiting from an inflated memory pricing environment that could send its stock higher.

However, there is another emerging bottleneck within the AI infrastructure space that could be even bigger than memory chips -- optical networking. Marvell Technology (NASDAQ:MRVL) is one of the best ways to capitalize on this boom. Let's look at the reasons why.

Image source: Getty Images.

Marvell Technology is the dominant player in a fast-growing optical niche

Goldman Sachs estimates that the optical networking market could grow from $15 billion this year to $154 billion in 2028. That's a massive increase of over 10x in just two years. This stunning growth will be fueled by the need for rapid connectivity within AI data center clusters, creating demand for high-speed optical networks and Ethernet.

Specifically, the data center optical interconnect (DCI) market alone could clock a 48% annual growth rate between 2024 and 2030, according to China Insights Consultancy. The firm estimates that the DCI market size could grow from less than $14 billion in 2024 to over $144 billion in 2030.

Marvell is in a terrific position to capitalize on this market's growth. It reportedly controls 60% to 65% of the optical digital signal processor space. Not surprisingly, the company is experiencing robust growth in sales of its optical networking products. Marvell noted in May that its data center interconnect business is on track to grow by more than 70% in fiscal 2027, exceeding its original estimate of 50% growth.

The company projects that its DCI module revenue will reach $1 billion in annualized revenue in fiscal 2028, double fiscal 2026 levels. Also, the Ethernet switching business is growing at a solid clip, with revenue expected to double in fiscal 2027 to $600 million. Marvell estimates that the Ethernet switching business could exceed $1 billion in annualized revenue in fiscal 2028.

Marvell, therefore, is growing faster than the optical networking market. Importantly, the significant growth opportunity in this market suggests that Marvell can sustain its impressive growth over the long run. Consensus estimates are projecting Marvell's revenue to double in just two fiscal years, and don't be surprised to see it keep growing at a healthy pace for a longer period.

MRVL Revenue Estimates for Current Fiscal Year data by YCharts

Is the stock a buy now?

Marvell stock has shot up 165% so far in 2026. This explains its expensive price-to-earnings (P/E) ratio of 81. The forward earnings multiple of 58, though expensive, points toward a solid increase in the company's bottom line.

Consensus estimates project a 43% increase in Marvell's earnings per share this year to $4.05. Importantly, its earnings growth is poised to accelerate.

MRVL EPS Estimates for Current Fiscal Year data by YCharts

This potential acceleration justifies this semiconductor stock's expensive multiples. The iShares Semiconductor ETF, an exchange-traded fund that tracks the semiconductor sector, has a P/E ratio of 64. So, it can be considered that Marvell's forward earnings multiple is almost in line with the broader index.

Assuming Marvell trades at even 45 times earnings after three fiscal years and its earnings per share jump to $9.45, as seen in the chart above, its stock price could reach $425. That's a potential jump of 80% over Marvell's current stock price. However, this AI stock could deliver greater gains if its earnings growth outpaces market expectations, driven by exponential growth in optical networking.

So, investors looking to capitalize on the next big AI bottleneck will do well to buy Marvell Technology stock before it soars higher.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Marvell Technology, Micron Technology, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.

The past five years have been phenomenal for Nvidia (NASDAQ:NVDA) investors. An investment of $1,000 made in Nvidia's shares five years ago is now worth almost $10,000.

The multibagger gains in Nvidia stock over this period have been fueled by artificial intelligence (AI)-driven demand for the company's chips. Investors may now be wondering how much more upside they can expect from Nvidia over the next five years.

After all, it is now the largest company in the world with a market cap of just over $5 trillion, as of this writing. The good news for Nvidia investors is that the company still has a massive addressable market that should allow it to sustain its outstanding growth until the end of the decade.

We will take a closer look at Nvidia's potential catalysts in this article and gauge the gains the stock could deliver by the end of the decade.

Image source: The Motley Fool.

Nvidia is more than just an AI GPU company

The data center business is Nvidia's largest source of revenue. The company's data center segment generated $75.2 billion in revenue in the first quarter of fiscal 2027, up 92% from the year-ago period. It also accounted for 92% of the company's top line.

However, what's worth noting is that Nvidia's data center chip business isn't just limited to its graphics processing units (GPUs), which have been the cornerstone of its growth over the years. It is also partnering with companies that design custom AI processors and optical components.

For instance, Nvidia entered into a partnership with custom AI and networking chip designer Marvell Technology earlier this year, investing $2 billion in the latter. The partnership will give Nvidia's customers the choice to use Marvell's custom AI processors when developing their infrastructure. Also, companies looking to develop custom AI chips with Marvell will have the opportunity to use Nvidia's high-bandwidth NVLink Fusion platform to help them integrate the custom processors into rack-scale server systems.

Such a partnership will allow Nvidia to cut its teeth in the custom AI processor market, where Marvell is a key player. Bloomberg estimates that the market for custom AI processors could be worth $118 billion by 2033. On the other hand, Nvidia has also set its sights on the co-packaged optics market, which has been booming due to the growing need for fast connectivity in AI data centers.

It entered into a partnership with optical interconnect technology provider Ayar Labs in June to strengthen the NVLink Fusion platform. Nvidia aims to help hyperscalers connect their AI infrastructure with optical networks, and this is another fast-growing area that could unlock a huge addressable market for the company.

Goldman Sachs predicts that the optical networking market could grow by a whopping 9x between 2026 and 2028, generating $154 billion in revenue after a couple of years. So, Nvidia is pulling the right strings to unlock new growth opportunities in AI. One such key opportunity is the one in server central processing units (CPUs), a market that has been dominated by Intel and AMD so far.

Nvidia is now selling its Vera server CPU as a stand-alone product, and it expects to generate $20 billion in revenue from its sales this year. Even better, the company notes that it has a $200 billion addressable opportunity in the server CPU market. In all, Nvidia is expanding into additional areas that should help it sustain its healthy growth rate in the future.

Here's how much upside investors can expect until 2030

Analysts predict that Nvidia's healthy growth rate will continue despite its massive revenue base, which isn't surprising given the additional opportunities the company can capitalize on and the enormous size of the AI accelerator market, where it is the dominant player.

NVDA Revenue Estimates for Current Fiscal Year data by YCharts

The catalysts discussed in this article suggest that Nvidia can sustain its terrific growth beyond fiscal 2029 (which will end in January 2029). Assuming Nvidia's revenue grows at even 15% in fiscal 2030 and fiscal 2031 (which will end in January 2031 and coincide with the majority of calendar 2030), its top line could reach $918 billion after five years (using fiscal 2029's projected revenue of $694.4 billion as the base).

If Nvidia trades at even 12 times sales at that time, half of its current price-to-sales ratio, its market cap could reach almost $11 trillion by 2030. That's just over double Nvidia's current market cap, which means that investors can still consider buying this AI stock for healthy long-term gains.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Goldman Sachs Group, Intel, Marvell Technology, and Nvidia. The Motley Fool has a disclosure policy.

The semiconductor industry is benefiting from the terrific demand for artificial intelligence (AI) chips. Nvidia (NASDAQ: NVDA) has been one of the biggest beneficiaries of the phenomenal growth in this sector in recent years.

Nvidia's dominance in the graphics processing unit (GPU) market has led to strong growth in the company's revenue and earnings in recent years. I think Nvidia will continue to dominate the AI chip market, despite the emergence of challengers such as Advanced Micro Devices (NASDAQ: AMD) and Qualcomm (NASDAQ: QCOM).

Let us look at the reasons why.

Image source: Nvidia.

Nvidia has significantly higher AI semiconductor revenue than its rivals

AMD and Qualcomm have been gaining traction in the AI chip market lately. However, Nvidia continues to dominate them. Nvidia's data center revenue stood at $75.2 billion in the first quarter of fiscal 2027, which ended on April 26, 2026, according to recent research from The Motley Fool. The report adds that Nvidia's data center revenue increased by 92% year over year during the quarter.

The Motley Fool also notes that AMD's data center revenue totaled $6.7 billion in its most recent quarter. This segment's revenue increased by 107% year over year. The important thing to note is that Nvidia's data center business grew at a healthy clip despite its significantly higher revenue base than AMD's.

Qualcomm is just getting started in the data center business. It anticipates $15 billion in data center revenue in fiscal 2029, which is just 20% of what Nvidia generated in the last reported quarter. What's worth noting is that Qualcomm is targeting the fast-growing AI inference market, but Nvidia is the dominant player in this niche. The chip giant controls an estimated 74% of the market for AI inference chips.

Nvidia's share of the overall AI chip market is reportedly in the 80% to 90% range, according to Silicon Analysts. As the market for AI chips is expected to reach $2 trillion in 2030, according to AMD, Nvidia's strong market share in this segment suggests its data center business could grow significantly over the long run. That's likely to be the case even if Nvidia were to cede some of its market share to rivals.

The earnings growth potential and valuation make Nvidia the better buy

The data tells us that Nvidia is the best semiconductor stock to buy for anyone looking to capitalize on AI-fueled growth in this market. There are a couple of additional reasons why I think Nvidia is a better buy than AMD or Qualcomm in 2026.

First, Nvidia's earnings will keep increasing at a solid clip over the long run, according to YCharts.

Data by YCharts

The chart above shows that AMD is expected to post a stronger earnings jump. But investors should note that they will have to pay a significant premium to buy AMD stock.

Data by YCharts

Qualcomm's earnings growth, meanwhile, clearly suggests that it isn't going to be a match for Nvidia in the semiconductor industry over the long run. The tepid earnings growth that Qualcomm is anticipated to deliver also explains why it trades at cheap multiples.

The 44% annual long-term earnings growth Nvidia is estimated to deliver (as per YCharts) can take its earnings per share to $29.53 after five years (using its fiscal 2026 earnings of $4.77 per share as the base). If Nvidia trades at 21 times earnings in fiscal 2031, in line with the S&P 500 index's forward earnings multiple, its stock price could reach $620.

That price target points to potential gains of nearly 3x, making Nvidia an ideal AI stock to buy and hold for the long run due to its robust growth prospects and attractive valuation.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ:NVDA) is all set to release its fiscal 2027 second-quarter results (for the three months ended July 26) after the market closes on Aug. 26.

The market will be eagerly awaiting the artificial intelligence (AI) bellwether's numbers and outlook, as they will provide clarity about the state of the AI market. It is worth noting that Nvidia stock has underperformed the broader semiconductor sector this year. The PHLX Semiconductor Sector index's 63% gains in 2026 are way ahead of the 21% jump in Nvidia's stock price this year.

However, a closer look at the earnings reports of the major U.S. hyperscalers suggests that this semiconductor stock could get a huge shot in the arm when it releases its quarterly report on Aug. 26.

Image source: Nvidia.

A $2.3 trillion revenue backlog points toward greater demand for Nvidia's chips

There is incredible demand for AI services, and that's evident from the massive revenue backlogs that major hyperscalers in the U.S. are sitting on. Bank of America notes that the top four cloud service providers in the U.S. ended the second quarter with an enormous backlog of $2.3 trillion. Analyst Vivek Arya points out that companies such as Microsoft, Oracle, Amazon, and Alphabet's Google need to invest aggressively in cloud computing capacity to meet their backlogs.

Oracle, for instance, estimates that it can convert only 12% of its backlog into revenue over the next year, while Microsoft expects to recognize 30% of the backlog as revenue over the same period. As a result, Arya expects that hyperscalers will continue investing more money in computing capacity. Moreover, neocloud companies, such as CoreWeave and Nebius, along with pure-play AI service providers, are on track to significantly expand their capacities.

Not surprisingly, Nvidia's peer, Advanced Micro Devices, noted on its recent earnings call that the total addressable market (TAM) for AI compute is poised to grow at a 40% compound annual growth rate (CAGR) over the long run, generating nearly $2 trillion in revenue by 2030. What's more, AMD now expects to clock faster growth than its earlier long-term revenue growth estimate of 35%.

Given that Nvidia is a much bigger player than AMD, with an estimated 80% to 90% share of the AI accelerator market, it is poised to win big from the lucrative opportunity over here. The increased backlogs of hyperscalers should ideally boost the demand for Nvidia's AI chips, paving the way for the company to deliver stronger-than-expected numbers and guidance.

Also, AMD noted on the earnings call that it now expects the server CPU market to grow by more than 50% annually through 2030, generating $220 billion in annual revenue.

That's well above the $60 billion estimate for the server CPU market that AMD delivered in November 2025. Nvidia has already set its sights on this massive market, noting that it can sell $20 billion worth of stand-alone server CPUs this year. Nvidia previously sold its server CPUs as part of rack-scale systems, and its decision to sell these chips on a stand-alone basis has unlocked a solid growth opportunity.

Nvidia will reportedly start selling its Vera server CPUs this month. This product could play a central role in helping the company deliver better-than-expected results and guidance, as server CPUs are now finding traction in AI data centers to support agentic AI and inference workloads.

Stronger-than-expected results and guidance should give the stock a big boost

Analysts are expecting a 97% year-over-year increase in Nvidia's revenue in fiscal Q2 to almost $92 billion, along with a similar increase in earnings per share to $2.08. The top-line estimate is slightly higher than the midpoint of Nvidia's guidance of $91 billion. It is also worth noting that Nvidia anticipates its non-GAAP gross margin to increase to 75% for fiscal Q2 from 72.7% in the year-ago period.

The margin increase that Nvidia has guided for suggests that its bottom-line growth could exceed Wall Street's expectations. Also, analysts are expecting Nvidia to guide for $2.35 in earnings per share for the current quarter, which would be an 80% increase from the year-ago quarter. There is a solid probability that Nvidia will call for a stronger earnings increase, as it is poised to start shipping its Vera Rubin processors in the second half of 2026.

The company has already noted that it has an order book worth a whopping $1 trillion for 2026 and 2027. For comparison, the company has generated $253 billion in revenue for the trailing twelve months. So, there is a chance that analysts could be underestimating Nvidia's growth potential, which is why a positive earnings surprise on Aug. 26 could send the stock soaring.

Moreover, Nvidia is trading at an attractive 25 times forward earnings, which is slightly lower than the tech-laden Nasdaq-100 index's forward earnings multiple of 26. So, investors are getting a solid deal on this AI stock right now when its outstanding earnings growth is considered. That's why it seems like a good idea to buy shares of Nvidia before its upcoming earnings report, as solid results and guidance could send the stock on a parabolic run.

Bank of America is an advertising partner of Motley Fool Money. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.

Aug. 26 is going to be a big day for the stock market. Nvidia (NASDAQ: NVDA), the world's largest company by market cap, will release its fiscal 2027 second-quarter results on that date.

Nvidia's results can be considered as a barometer of the state of artificial intelligence (AI) technology, which has played a central role in boosting the stock market in recent years. A solid set of numbers and guidance from Nvidia will boost investor confidence not just in this AI stock but in the overall AI infrastructure ecosystem.

That's why I believe that Micron Technology (NASDAQ: MU), one of Nvidia's key suppliers, could witness a parabolic jump in its stock price after Aug. 26. Let's look at the reasons why that may be the case.

Image source: Micron Technology.

Nvidia's next-generation AI chips will give Micron's prospects a big boost

Micron makes high-bandwidth memory (HBM) for Nvidia. These dedicated AI memory chips are deployed in chip systems to quickly transport massive data sets to graphics cards and other AI accelerators.

Micron announced earlier this year that it has started the high-volume production of HBM chips for Nvidia's upcoming Vera Rubin processors. Also, Nvidia confirmed in May that it has ramped up Vera Rubin into full production. It is worth noting that the max HBM capacity of the Vera Rubin R100 graphics processing unit (GPU) is poised to jump to 288 gigabytes (GB) from the Blackwell B200's 192 GB.

Also, the Vera Rubin chips use a newer version of HBM, which reportedly costs 80% more than the previous generation, according to semiconductor industry tracker Silicon Analysts. So, Micron seems well-positioned to see a jump in both revenue and margins, driven by higher memory volumes and improved pricing for memory chips it makes for Vera Rubin processors.

Moreover, Nvidia has a massive order pipeline of $1 trillion for Vera Rubin and Blackwell processors in 2026 and 2027. As a result, the chip giant is capable of delivering stronger-than-expected growth and guidance on Aug. 26, which could lift Micron stock considerably given the tight relationship between the two companies.

Micron's valuation suggests that the stock could jump substantially

Trading at just 6 times forward earnings, Micron is a no-brainer buy right now, given that its earnings are expected to grow at a terrific pace over the long run.

Data by YCharts

For instance, Micron's earnings are expected to jump by 111% in fiscal 2027 (which begins later this month) to $154.89 per share. Assuming Micron trades at even 15 times earnings after a year, which is a significant discount to the Nasdaq-100 index's forward earnings multiple of 26, its stock price could reach $2,323.

That's a potential jump of 147% from current levels, and Nvidia's upcoming results could turn out to be the trigger that sends Micron on an impressive bull run in the coming year.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.

SK Hynix (NASDAQ: SKHY) and Sandisk (NASDAQ: SNDK) are among the leading names in the memory industry, and both companies have been clocking outstanding growth in recent quarters amid favorable demand-supply dynamics.

SK Hynix stock was recently listed on the Nasdaq, and it has witnessed a lot of volatility since then due to the rotation out of memory stocks. Sandisk, meanwhile, has delivered stellar returns to investors over the past year, driven by a phenomenal increase in revenue and earnings.

Does this make Sandisk a better semiconductor stock to buy right now? Or will SK Hynix's dominant position in the memory market help it deliver bigger gains by the end of 2027? Let's find out.

Image source: The Motley Fool.

SK Hynix enjoys a clear advantage over Sandisk

Sandisk is a pure-play NAND flash memory manufacturer. Its growth has been powered by the booming demand for artificial intelligence (AI) data center storage, which has led to a shortage of traditional hard disk drives (HDDs). As AI data centers started shifting to flash-based enterprise solid-state drives (SSDs), Sandisk's business took off.

Data by YCharts

Counterpoint Research notes that Sandisk controlled 11% of the NAND flash market in the second quarter. However, its market share is eclipsed by SK Hynix and its subsidiary Solidigm, which together control 22% of the NAND flash market.

Another important point worth noting is that SK Hynix also manufactures dynamic random-access memory (DRAM) chips, a market where Sandisk doesn't operate. SK Hynix is a key player in the DRAM market with a 26% share, according to Counterpoint, which makes it a more diversified memory-focused investment over Sandisk.

Also, SK Hynix's dominant position in the DRAM and NAND flash markets helps explain why it is a much larger company.

Data by YCharts

Of course, Sandisk's revenue and earnings have been growing at a faster pace than SK Hynix this year, but investing in the latter has certain advantages that could make it the better AI stock to buy and hold until the end of 2027.

The memory stock with stronger upside potential is...

SK Hynix's earnings per share could increase by 23% in 2027, according to consensus estimates. Meanwhile, Sandisk's earnings per share in fiscal 2027 (which will end in July next year) could triple. However, analysts expect a significant slowdown in Sandisk's earnings growth to just 23% in fiscal 2028.

There is a solid chance of SK Hynix easily coasting past Wall Street's expectations in 2027, given its much larger market share in both DRAM and NAND flash. After all, the favorable trends that could lead to a 3x increase in Sandisk's earnings over the next year will be a tailwind for SK Hynix as well.

So, analysts seem to be underestimating SK Hynix's growth potential. Also, SK Hynix is trading at just 6.6 times forward earnings, well below Sandisk's forward earnings multiple of 28. The cheaper valuation can pave the way for stronger upside in SK Hynix stock, especially considering that its earnings growth could be much stronger than what analysts are expecting next year.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

An investment of $1,000 made in shares of Advanced Micro Devices (NASDAQ: AMD) three years ago is now worth more than $4,600, and it is worth noting that a big chunk of those gains has arrived in the past year and a half.

AMD stock has taken off big time of late amid the company's growing prominence in artificial intelligence (AI) chips. Investors, however, may be wondering if there is more upside in store for this chipmaker following the phenomenal upside it has already delivered.

We will take a closer look at AMD's prospects and valuation in this article to determine where this semiconductor stock will be in five years.

Image source: The Motley Fool.

AMD's expanding addressable opportunity points toward terrific long-term growth

Semiconductor demand isn't slowing down, primarily due to the growing demand for chips used in AI data centers. AMD management noted on its recent earnings call that it sees the total AI compute market growing to $2 trillion in 2030, clocking an annual growth rate of 40% over the long run.

The company also points out that the total addressable market (TAM) for data center accelerators will increase at a 45% annual rate through 2030, clocking $1.4 trillion in revenue by the end of the decade. The good news for AMD investors is that its data center business is growing faster than the end market.

It reported a 107% year-over-year increase in data center revenue in Q2 to $6.7 billion, fueled by the improving demand for both its Epyc server processors and Instinct graphics processing units. That was an improvement over the 57% revenue growth AMD clocked in the data center segment in Q1. The company has generated $12.5 billion in data center revenue in the first half of the year, putting this segment's annual run rate at $25 billion for 2026.

Assuming AMD's data center revenue grows in line with the overall market's estimated growth rate of 45% over the next five years, its revenue from this segment will reach $160 billion in 2031. That's almost 4x AMD's revenue in the trailing twelve months. Not surprisingly, AMD is now confident of "significantly" exceeding its three-to-five year annual revenue growth target of 35% and earnings per share estimate of $20.00 that it outlined at its financial analyst presentation in November last year.

In fact, analysts expect AMD to exceed its $20.00 earnings-per-share target in 2028, following recent upward revisions to their estimates.

Data by YCharts

Importantly, the company's long-term earnings growth estimates have also jumped nicely.

Data by YCharts

Can the stock become a multibagger over the next five years?

We have already seen in the chart above that AMD's earnings are expected to nearly triple in just two years, with an annual growth rate of nearly 70% between 2026 and 2028. Assuming AMD's bottom line grows at a relatively conservative annual pace of 40% in the three years following 2028, its earnings per share could reach $59.52 after five years.

Multiplying the projected earnings by the tech-laden Nasdaq-100 index's forward earnings multiple of 26 (by using the index as a proxy for tech stocks) suggests that this AI stock could jump to $1,547 in five years. That's just over triple AMD's current stock price, which means that it isn't too late for investors to buy this high-flying tech stock.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.

Microsoft is the fourth-largest company in the world with a market cap of $3.5 trillion, reaching this position thanks to its diversified businesses that are benefiting from the growing adoption of artificial intelligence (AI).

From cloud computing to productivity to gaming, Microsoft offers a range of products and services that have been driving healthy growth for the company. However, there's another tech stock that has been outperforming Microsoft over the past year.

Shares of Broadcom (NASDAQ: AVGO) have appreciated 28% over the past year, while Microsoft stock has dropped 7%. Broadcom is currently the eighth-largest company in the world with a $1.9 trillion market cap. I won't be surprised to see this semiconductor giant rise substantially and join Microsoft in the $3 trillion market cap club. Let's look at the reasons why.

Image source: Getty Images.

Broadcom's growth is poised to accelerate nicely thanks to growing AI chip demand

Broadcom's custom AI processors and networking chips put the company in a terrific position to deliver healthy growth. The company's revenue in the first six months of fiscal 2026 increased by 39% year over year to $41.5 billion. However, Broadcom anticipates serious acceleration in growth in the recently concluded fiscal Q3.

The company expects an 84% year-over-year jump in revenue for the quarter to $29.4 billion. Broadcom's booming AI chip business will drive this outstanding growth. The company estimates that its AI revenue in fiscal Q3 increased by more than 200% year over year to $16 billion. The good news for investors is that Broadcom predicts further growth in its AI revenue in fiscal 2027.

The chip designer sees its AI semiconductor revenue exceeding $100 billion next fiscal year, which would translate into a substantial uptick in its quarterly revenue run rate compared with this year. Broadcom management noted in its June earnings call that its long-term agreements with AI customers such as Anthropic, Meta Platforms, OpenAI, and Alphabet's Google will play a central role in accelerating growth.

In fact, Broadcom is confident of maintaining its robust AI revenue growth in fiscal 2028 as well, thanks to the long-term agreements it has in place with six core customers. For instance, Broadcom is on track to deploy 1 gigawatt (GW) of AI computing capacity for Anthropic this year, in partnership with Google. It anticipates the deployment for Anthropic to jump to more than 3 GW in 2027.

This explains why Mizuho analyst Vijay Rakesh expects Broadcom's revenue from Anthropic to double to $42 billion in 2027 from $21 billion this year. So, the other multi-generation agreements Broadcom has in place with customers explain why analysts expect its revenue to jump by more than 2x in just two years.

Data by YCharts

Importantly, Broadcom can sustain such healthy growth levels for a longer period. That's because the custom AI chip market is expected to generate $308 billion in revenue in 2035, according to Globe Market Research. That translates into a compound annual growth rate (CAGR) of 24% over the next decade. Similarly, the data center optical interconnect market is poised to grow 10x between 2024 and 2030, generating $144 billion in revenue by the end of the decade, according to China Insights Consultancy.

Broadcom is a key player in both these markets. It reportedly controls 70% of the custom AI chip space and is considered to be among the leading players in the optical networking market as well. All this explains why analysts have become bullish about Broadcom's long-term earnings growth prospects.

Data by YCharts

The math behind a $3 trillion valuation

Broadcom's earnings could increase by 70% in the current fiscal year to $11.63 per share, according to consensus estimates. The good news is that it is expected to continue growing at a solid pace over the next two years as well.

Data by YCharts

The chart above tells us that Broadcom's earnings growth in fiscal 2027 could match fiscal 2026 levels. The forecast for fiscal 2028 suggests a 35% increase in its bottom line, though it could do better than that due to the multi-year agreements it has in place with major AI companies.

Broadcom stock trades at 21 times forward earnings. That's a discount to the tech-laden Nasdaq-100 index's forward earnings multiple of 26. Ideally, Broadcom deserves to trade at a premium valuation in the future due to its accelerating growth. However, even if it trades in line with the Nasdaq-100 index's forward earnings multiple at the end of fiscal 2028, its stock price could reach $686 (assuming earnings per share of $26.38 in fiscal 2028, as seen in the previous chart).

That's a potential jump of 77% from current levels, which will be enough to take Broadcom's market cap beyond $3 trillion. So, this AI stock has the potential to join Microsoft in the $3 trillion club in the next two years, giving investors a solid reason to buy Broadcom and hold it for the long run.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.

Micron Technology (NASDAQ:MU) has delivered eye-popping gains of more than 8x over the past year, driven by an incredible increase in the company's revenue and earnings amid a favorable memory pricing environment.

However, investors have been booking profits in Micron stock lately. It has slipped 16% from the 52-week high it reached a couple of months ago, and that's quite surprising, since Micron's stunning growth isn't showing any signs of slowing. In fact, a closer look at the memory market's demand-supply dynamics will make it clear that the catalyst driving Micron's phenomenal growth over the past year is here to stay over the next year as well.

But will that be enough for this semiconductor stock to regain its mojo and jump another 200% by the end of 2027? Let's find out.

Source: Micron Technology.

Meet the historical trend that has led to an astronomical jump in Micron stock

Artificial intelligence (AI) data centers require faster compute memory to move huge data sets quickly to graphics processing units (GPUs), server processors, and custom AI chips. This faster compute is enabled by stacking multiple dynamic random-access memory (DRAM) chips to create high-bandwidth memory (HBM).

As a result, manufacturing HBM requires 3x the wafer capacity of a conventional DRAM chip. It is worth noting that global HBM revenue nearly doubled in 2025, according to Yole Group. Not surprisingly, memory demand has substantially exceeded supply, as memory manufacturers have prioritized HBM production due to higher margins.

JPMorgan notes that DRAM prices will jump by a whopping 400% from the beginning of 2024 to the end of 2026. As Micron derives over three-fourths of its revenue from DRAM sales, it is easy to see why the company's revenue and earnings growth have shot up over the past year.

MU Revenue (TTM) data by YCharts

The good news for Micron investors is that the memory market's growth is poised to continue in 2027. Market research firm TrendForce estimates that the global DRAM market's revenue could increase to $903.3 billion in 2027 from $618.7 billion this year. Micron has a 25% share of the DRAM market, according to Counterpoint Research. A similar share will increase the company's DRAM revenue to almost $226 billion in 2027, based on TrendForce's DRAM market size estimate.

That's significantly higher than the $90 billion in revenue Micron has generated over the trailing twelve months. Also, Micron's share of NAND flash memory stood at 13% at the end of the previous quarter. It is worth noting that NAND flash memory accounts for the rest of Micron's top line. So, the 40% increase in global NAND flash revenue expected next year to $379.4 billion bodes well for Micron investors.

A 10% share of the NAND flash market in 2027 would bring Micron's revenue from this segment to almost $38 billion. In all, the company's revenue could exceed $260 billion in calendar 2027 if we combine projected NAND and DRAM revenue. That's almost triple the revenue Micron has generated over the past year.

Moreover, Micron's bottom line should also keep growing at an incredible pace. That's because the memory supply shortage isn't expected to go away any time soon. Micron CEO Sanjay Mehrotra remarked on the company's June earnings call:

We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments coupled with structural supply constraints.

Micron peer SK Hynix recently noted that 2027 could be the worst year for the memory industry in terms of supply. This explains why analysts have become bullish on Micron's earnings growth for the current and next fiscal years.

MU EPS Estimates for Current Fiscal Year data by YCharts

But can the stock really jump by another 200%?

We have already seen that Micron has the potential to generate $260 billion in revenue next year, driven by its healthy DRAM and NAND flash market share and the solid growth in both these markets. Micron currently trades at 12 times sales, a slight premium to the U.S. tech sector's average sales multiple of 7.6.

However, Micron's red-hot growth justifies the premium, and it won't be surprising to see it command a bigger premium in the future. Assuming it trades at 15 times sales at the end of 2027 and its revenue hits $260 billion, Micron's market cap could jump to $3.9 trillion. That's 242% higher than its current market cap, indicating that this AI stock could indeed jump by more than 200% by the end of next year, and that's why growth-oriented investors can still consider buying Micron as its bull run isn't over yet.

JPMorgan Chase is an advertising partner of Motley Fool Money. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Micron Technology. The Motley Fool has a disclosure policy.

The demand for artificial intelligence (AI) data centers is exceeding supply, which isn't surprising, as major hyperscalers and AI companies are sitting on massive backlogs that they need to fulfill.

The top four cloud computing companies in the U.S. alone are sitting on a combined backlog worth a whopping $2.3 trillion, according to Bank of America. As a result, these companies are looking to aggressively add more data center capacity to satisfy their enormous backlogs. This is great news for neocloud infrastructure provider Nebius Group (NASDAQ:NBIS), which builds dedicated AI data centers and rents out capacity to customers.

This AI infrastructure stock popped 34% on Aug. 12, driven by solid Q2 results it released the same day. The company's numbers crushed expectations, and management's comments about AI data center demand made it clear that its red-hot growth is sustainable. Let's take a closer look at Nebius' numbers and check why this AI stock can soar higher following phenomenal gains of 199% in 2026.

Image source: The Motley Fool.

Nebius' red-hot revenue growth and narrowing losses point toward a brighter future

Nebius doesn't just build dedicated AI cloud infrastructure and rents them to customers. It also offers a software stack for training, running inference, and fine-tuning AI models, among other things. This end-to-end business model is working well for the company.

Nebius reported a 454% year-over-year increase in Q2 revenue to $582 million. The company also reduced its adjusted net loss by 64% to $33.2 million. This impressive performance was driven by the robust demand for Nebius' full-stack AI data center infrastructure. The company noted that its total contract value jumped by 4x year over year in Q2.

Even better, the average contract value (ACV) for each megawatt (MW) of data center capacity that Nebius is now letting out is increasing at a terrific clip. The ACV per megawatt was $12 million last year. However, the number rose to over $20 million in the previous quarter. More importantly, Nebius sees its ACV per MW exceeding $40 million in the current quarter for short-term capacity deals.

This increase in deal size shows just how strong the demand for data center infrastructure is right now. Another important point is that Nebius closed four large deals in Q2, with an average deal size exceeding $1 billion. Also, Nebius is taking prepayments from customers signing large deals, which will allow it to quickly build AI infrastructure without taking on debt and straining the balance sheet.

Specifically, 50% to 60% of the company's capital expenses will be financed by pre-payments. Meanwhile, the growing demand for Nebius' software-centric Token Factory platform, which helps customers run AI models and inference applications, increased by 3x in the previous quarter.

In all, the growing contract value for Nebius' AI data center infrastructure and the increasing use of its software solutions are helping the company clock solid top-line growth and reduce losses. Also, the company has built a solid pipeline that should allow it to capitalize on the heavy investments in AI data center capacity.

Nebius has increased its contracted data center power capacity guidance to 5 gigawatts (GW) by the end of 2026, up from the 4 GW guidance it issued in May. The contracted capacity refers to the agreements Nebius has in place with utility companies to build new data centers. Given that Nebius aims to end 2026 with connected data center capacity of 800 MW to 1 GW, the company is well-positioned to deliver outstanding revenue growth over the long run once its contracted capacity is taken into account.

Here's how the stock could become a multibagger

Nebius operates in a fast-growing market and is on track to significantly expand its connected data center capacity in the long run. This explains why the company's top line is anticipated to jump significantly through 2028.

NBIS Revenue Estimates for Current Fiscal Year data by YCharts

I won't be surprised to see Nebius sustain its phenomenal growth momentum beyond the next three years, driven by additional capacity and growing adoption of its AI software stack. However, the incredible growth that Nebius is poised to deliver through 2028 should easily help the stock become a multibagger.

A revenue of $22.4 billion at the end of 2028 (in line with consensus estimates seen in the above chart) will take its market cap to $170 billion, assuming it trades in line with the U.S. tech sector's average sales multiple of 7.6. That's 2.3x higher than its current market cap. However, this tech stock could deliver bigger gains over the next three years, as its remarkable growth should ideally be rewarded with a premium valuation, suggesting it isn't too late for investors to buy Nebius.

Bank of America is an advertising partner of Motley Fool Money. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Shares of Micron Technology and Sandisk have clocked phenomenal returns over the past year, primarily due to the mission-critical role of the memory chips produced by them for running artificial intelligence (AI) workloads in data centers.

Faster memory chips and larger storage help solve a key bottleneck in AI data centers by enabling the rapid transport of large volumes of data to data center accelerators. As a result, accelerator chips, such as graphics cards and custom processors, don't have to sit idle and waste energy. However, a closer look at the AI infrastructure ecosystem makes it clear that memory isn't the only bottleneck impeding accelerator performance.

Image source: Getty Images.

Meet the fast-growing company winning big from the next big AI bottleneck

The rapid transport of data has created an incredible demand for optical networking components, which use light to quickly transmit massive amounts of data over long distances via fiber-optic cables. Investment banking and brokerage firm Rosenblatt Securities estimates that optical component companies could increase production capacity by 12x between 2025 and 2030.

However, even that won't be enough to meet the booming demand for optical components. Rosenblatt predicts that supply will trail demand by 50% in 2030 despite the massive increase in production through the end of the decade. This explains why optical and photonics components supplier Lumentum Holdings (NASDAQ: LITE) has been experiencing incredible growth in revenue and earnings.

The company released its fiscal 2026 fourth-quarter results (for the three months ended June 27) on Aug. 11, and its shares popped more than 13% the following day. Lumentum easily crushed analysts' expectations, and its guidance makes it clear that the company's red-hot growth momentum is sustainable.

Lumentum's revenue shot up by 109% year over year to just over $1 billion in fiscal Q4, exceeding the $988 million consensus estimate. Its bottom-line growth, however, was the icing on the cake. Lumentum's non-GAAP operating margin increased by 21.6 percentage points year over year in fiscal Q4 to 36.6%. As a result, the company's adjusted earnings per share rose almost 3.7x year over year to $3.23, exceeding the consensus estimate of $2.97.

Lumentum expects its revenue in the current quarter to increase at a stronger pace of 134% year over year to $1.25 billion. The company anticipates adjusted earnings per share to jump from $1.10 in the year-ago period to $4.20 per share in the current quarter, which would be an improvement over the growth it clocked last quarter.

Investors can expect Lumentum's earnings to continue growing at such healthy rates over the long run amid the ongoing supply crunch in optical components. An important point worth noting is that Goldman Sachs expects the optical networking market's revenue to increase by a whopping 9x to $154 billion by 2028.

This should pave the way for robust top-line growth at Lumentum in the long run, while supply constraints should ensure that its margins continue to rise, fueling further earnings growth.

Lumentum stock can keep soaring despite jumping substantially this year

Lumentum stock has clocked impressive gains of 140% in 2026, as of this writing. However, the company's terrific earnings growth potential suggests this AI stock is poised for further upside. Lumentum's non-GAAP earnings per share increased by just over 4x in fiscal 2026 to $8.67. The following chart shows that Lumentum's earnings are on track to grow impressively over the next three years.

Data by YCharts

Specifically, Lumentum's earnings are projected to increase by 5.3x in just three years (from fiscal 2026 levels). That translates into a compound annual growth rate (CAGR) of 74%, which is much higher than the 30% and 14% earnings growth that S&P 500 companies are expected to deliver over the next two years.

Lumentum trades at 42 times forward earnings, which is double the forward earnings multiple of the S&P 500 index. However, that valuation is justified by its outstanding growth. Assuming it continues to trade at 43 times earnings after three years and its earnings per share reach $45.98, in line with the consensus estimates shown in the chart above, its stock price could jump to $1,977.

That suggests potential upside of 113% over the next three years, which is why investors looking to add a growth stock can still buy Lumentum, as it could continue to skyrocket due to favorable demand-supply dynamics in the optical components space.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Lumentum, and Micron Technology. The Motley Fool has a disclosure policy.

Neocloud infrastructure provider CoreWeave (NASDAQ: CRWV) went public in March last year, and shares of the company have shot up by an impressive 163% since then.

However, CoreWeave stock has experienced significant volatility since its initial public offering (IPO). Concerns about the company's mounting debt and potential competition from a key customer explain why its stock has slipped 42% from the 52-week high it reached in October last year.

But that's a good thing for savvy investors looking to add a fast-growing company to their portfolios right now. CoreWeave's latest quarterly results clearly indicate that the company's red-hot growth is sustainable, and that's probably why its shares soared after it released its Q2 earnings report on Aug. 11.

Let's take a closer look at CoreWeave's results and check why this artificial intelligence (AI) stock has the potential to deliver multibagger returns over the next two years.

Image source: The Motley Fool.

CoreWeave's backlog keeps getting better

CoreWeave builds and rents out dedicated AI data centers to AI companies, hyperscalers, and other customers looking to run AI workloads in the cloud. Not surprisingly, the company has been witnessing phenomenal demand for its AI data centers.

This explains why its Q2 revenue jumped by an impressive 112% year over year to $2.58 billion, slightly ahead of the $2.56 billion consensus estimate. What's more, CoreWeave's adjusted loss per share of $1.03 was lower than the Street estimate of $1.20. The company's guidance was the icing on the cake.

CoreWeave has increased its 2026 revenue guidance to a range of $12.4 billion to $13.2 billion, up from the earlier range of $12 billion to $13 billion. The company now expects to exit the year with annualized run rate revenue of $19 billion, which is higher than the earlier estimate of $18.5 billion. Clearly, CoreWeave anticipates its healthy growth to continue in 2027, and that's not surprising given its impressive revenue backlog.

CoreWeave's revenue backlog shot up from $30.1 billion in the year-ago period to $104.2 billion in the previous quarter. Even better, the company points out that this backlog doesn't include the $25 billion in net new customer commitments it has already received in the current quarter.

The ballooning backlog makes it clear that a recent report about Meta Platforms -- a key CoreWeave customer -- looking to rent out its existing cloud computing capacity to third parties isn't a problem for the neocloud specialist. That's not surprising, as CoreWeave notes that the demand for AI compute is accelerating.

Last month, CNBC spoke to several tech executives who pointed out that AI compute demand isn't slowing down. Chip designers are finding it difficult to fulfill demand, and Nvidia CEO Jensen Huang's comment that agentic AI workloads will require 1,000% more compute than generative AI over the next two years suggests that CoreWeave's AI infrastructure will continue to remain in hot demand.

CoreWeave remains well-positioned to capitalize on this lucrative market. The company was operating 1.5 gigawatts (GW) of active data center capacity at the end of Q2. It has added eight new data centers so far this year. Importantly, CoreWeave has 4.2 GW of contracted power capacity that it can use to build new AI data centers.

So, the company can sustain its outstanding growth over the long run, as its backlog will continue to expand due to rapidly increasing demand for AI data centers.

Here's why this AI stock can become a multibagger

CoreWeave expects to convert 40% of its massive revenue backlog into actual revenue within the next two years. That points toward cumulative revenue of just over $40 billion in the next two years. Moreover, it believes that it can convert another 39% of its backlog into revenue between the next 25-48 months.

Given that CoreWeave's backlog has been expanding at a nice clip and it is focused on aggressively expanding its data center capacity, it is easy to see why analysts are forecasting robust revenue growth at CoreWeave.

Data by YCharts

For a company that's clocking outstanding revenue growth, CoreWeave stock trades at just 7.2 times sales. That's almost in line with the U.S. tech sector's average sales ratio of 7.6x. CoreWeave should ideally trade at a premium, but even if it trades at a discounted 5x sales at the end of 2028 and clocks $41 billion in revenue (based on the consensus estimate in the chart above), its market cap could jump to $205 billion within the next three years.

CoreWeave has a market cap of $58 billion as of this writing, which means that it has the potential to indeed become a multibagger by 2028. Also, CoreWeave's sales multiple suggests that it is a value stock, which is why it makes sense to buy it before it goes on a bull run.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.

Sandisk (NASDAQ: SNDK) started trading as a separate entity on the stock market in February last year after being spun off from Western Digital. A $1,000 investment in Sandisk stock following its listing is now worth more than $45,000, as of this writing.

This multibagger performance has been driven by the incredible demand for NAND flash storage, which is being deployed in artificial intelligence (AI) data centers to store the large volumes of data required for training models and running inference workloads. Investors, however, may now be wondering if there is more upside in store for this semiconductor stock following the astronomical gains it has clocked since its listing.

The good news is that Sandisk stock's red-hot surge isn't over yet. If you've $1,000 in investible cash right now, you can consider buying shares of Sandisk with that money, as it can significantly increase your wealth. Here's why.

Image source: Getty Images.

Sandisk's addressable market is poised to jump significantly

Sandisk management noted in its 2026 investor day presentation that its addressable market is poised to jump by more than 3x this year to $300 billion. Even better, the company sees the NAND flash market growing to $500 billion in 2027, with half of the revenue opportunity coming from data centers.

Sandisk reported $20 billion in revenue in the recently concluded fiscal 2026 (which ended on July 3), with the metric growing by 175% from the prior year. So, the company is scratching the surface of a massive opportunity that should allow it to sustain its phenomenal growth rate for years to come. It won't be surprising to see Sandisk's addressable market becoming bigger by 2030, driven by the growing adoption of agentic AI applications.

An important point worth noting here is that Sandisk controlled an 11% share of the NAND flash market in Q2. A similar share at the end of 2027 will take its revenue to $55 billion, based on the $500 billion addressable market estimate seen earlier. That's almost thrice the revenue Sandisk achieved in the latest fiscal year.

Meanwhile, analysts are forecasting a 141% increase in Sandisk's revenue in fiscal 2027 to $49 billion, followed by a slowdown to almost 20% in fiscal 2028.

Data by YCharts

The chart above also shows that consensus estimates project a decline in Sandisk's revenue in fiscal 2028. However, the company has put such concerns to rest at its latest investor day. Sandisk predicts that it can clock mid-to-high teens revenue growth between fiscal 2028 and fiscal 2030.

What's more, it expects non-GAAP gross margin to remain at 80% during this period, which is higher than the 71.6% gross margin it reported in fiscal 2026. So, Sandisk seems poised to clock healthy bottom-line growth over the next five years, potentially outpacing consensus expectations that predict a drop in its bottom line after a couple of years.

Data by YCharts

Here's what a $1,000 investment in Sandisk will be in 2030

We have seen earlier in the article that analysts anticipate Sandisk's revenue to jump to $58 billion in fiscal 2028. The company expects its annual revenue growth to be in the mid- to high-teens between fiscal 2028 and 2030. Assuming its revenue grows at 15% a year in fiscal years 2029 and 2030, its top line could jump to $77 billion after four years.

The U.S. tech sector has an average price-to-sales ratio of 7.6. If Sandisk stock trades at this valuation after four years, its market cap could increase to $585 billion. That's 2.4x higher than its current market cap. So, an investment of $1,000 in Sandisk right now could be worth more than $2,400 by 2030.

However, I have assumed a conservative sales multiple in my calculation. Sandisk currently trades at 10 times sales, a slight premium to the tech sector. That premium can be justified by the company's rapid revenue growth. So, this AI stock seems poised to deliver bigger gains over the next four years as it could be rewarded with a premium valuation, making it an ideal bet for investors looking to buy a high-growth company.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool has a disclosure policy.

The artificial intelligence (AI)-fueled semiconductor boom isn't showing any signs of slowing, as major hyperscalers and pure-play AI companies continue to invest aggressively in infrastructure to meet the tremendous demand for AI services and to fulfill their massive contractual backlogs.

Market research firm Omdia estimates that the global semiconductor industry's revenue could jump by an impressive 94% in 2026. The firm notes that computing and data storage chips will generate just under $1 trillion in revenue this year. Importantly, semiconductor specialist Advanced Micro Devices (NASDAQ: AMD) predicts that the market for high-performance and AI computing chips could reach $2 trillion by 2030.

This is great news for semiconductor stocks such as AMD and Nvidia (NASDAQ: NVDA), which have been enjoying phenomenal growth amid booming demand for AI chips. However, I think that there is a better way to play the AI-driven semiconductor boom by investing in a company that plays an instrumental role in powering AMD and Nvidia's solid growth -- Taiwan Semiconductor Manufacturing (NYSE: TSM).

Let's see why.

Image source: Getty Images.

TSMC is the most important player in the AI chip ecosystem

AMD and Nvidia design data center chips such as central processing units (CPUs) and graphics processing units (GPUs). These are deployed in AI data centers and edge applications, such as personal computers and vehicles. Both companies have been experiencing phenomenal growth in revenue and earnings.

Data by YCharts

AMD recently released its second-quarter results, posting a 50% year-over-year increase in revenue to $11.5 billion. Its non-GAAP earnings increased at a much stronger pace of 246% year over year to $1.66 per share. AMD attributed its impressive performance to robust demand for its server CPUs and GPUs, resulting in a 107% year-over-year increase in data center revenue in Q2.

The good news for AMD stock investors is that its solid growth trajectory is here to stay. The company anticipates a 41% year-over-year revenue increase in the current quarter. However, it could exceed that estimate due to the launch of its Helios rack-scale server platform and the introduction of newer, faster AI compute chips.

Nvidia, meanwhile, is poised to release its fiscal 2027 second-quarter results later this month. It expects $91 billion in revenue for fiscal Q2, pointing to a year-over-year increase of 95%. Nvidia can sustain such terrific growth over the long run, given its dominant position in the AI chip ecosystem.

So, it won't be surprising to see these two AI stocks delivering healthy gains to investors over the long run. However, for investors seeking a more comprehensive play in the AI semiconductor space, TSMC appears to be a better bet than AMD or Nvidia. That's because TSMC's foundry business model makes it one of the best ways to capitalize on the AI chip boom.

Fabless chip designers, including AMD and Nvidia, use TSMC's fabrication facilities to manufacture their chips. However, TSMC's scope isn't limited to just these two fabless chipmakers. TSMC also makes chips for Apple, Qualcomm, Broadcom, Amazon, Microsoft, Alphabet, and others. This diversified clientele exposes TSMC not only to growth in AI data center chips but also to the growing demand for AI-capable PCs and smartphones.

Not surprisingly, TSMC's growth rate is getting better. The company's revenue in the first seven months of the year increased by 37% year over year, well above the 31.6% growth it delivered in 2025. The Taiwan-based foundry giant recently released its July revenue report, reporting a 45% year-over-year increase.

This indicates the company is on track to beat its updated 2026 revenue growth guidance of 40%. More importantly, TSMC sees strong AI chip demand persisting over the long run, which explains why the company remains focused on aggressively expanding the output of its advanced chipmaking nodes used by the likes of AMD and Nvidia.

For instance, the output of TSMC's popular 3-nanometer (nm) process node is poised to increase by 20% by the end of 2026, as compared to the first half of the year. Moreover, the demand for the company's 2nm process node is significantly higher than for the 3nm node, which isn't surprising, given the improved performance and reduced power consumption it offers over the 3nm platform.

As a result, TSMC seems well-positioned to maintain its dominant market share of 73% in the foundry market. TSMC is the undisputed leader in this space, with second-placed Samsung holding just 7% of the foundry market, according to Counterpoint Research. This outstanding market share helps TSMC exercise solid pricing power, which explains why the company is reportedly planning to implement a 25% price increase next year for customers looking to purchase additional AI chips.

That will be on top of the standard 5%-10% price increase that TSMC plans for its advanced chipmaking services. Not surprisingly, analysts have been becoming more bullish about TSMC's long-term earnings growth prospects in recent months.

Data by YCharts

Stronger earnings growth will send this chip stock soaring

TSMC stock has jumped 76% over the past year. However, it can still be bought at an attractive 25 times forward earnings. For comparison, the iShares Semiconductor ETF, which invests in semiconductor companies, has a price-to-earnings ratio of 67. So, investors are getting a solid deal on TSMC right now, especially given that its bottom-line growth rate is on track to pick up.

Data by YCharts

Even if TSMC trades at an attractive 30 times earnings at the end of 2028 and its earnings per share reach $28.26, the stock could jump to $848. That's nearly double TSMC's stock price right now. Another point worth noting is that TSMC's forward earnings multiple is almost in line with Nvidia's, and the foundry giant is significantly cheaper than AMD, which has a forward earnings multiple of 63.

It won't be surprising to see TSMC commanding a higher multiple in the future, which could set this stock up for bigger gains in the long run as its earnings growth accelerates.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Broadcom, Microsoft, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, and iShares Trust-iShares Semiconductor ETF. The Motley Fool has a disclosure policy.

Sandisk (NASDAQ: SNDK) stock has hit a rough patch lately, with shares of the fast-growing memory specialist down by 45% from the 52-week high it reached on June 22.

Investors would have expected this semiconductor stock to step on the gas once again following the release of its fiscal 2026 fourth-quarter results (for the three months ended July 3) on Aug. 5. However, that wasn't the case as Sandisk stock fell almost 7% the following day. The surprising thing to note here is that Sandisk remains under pressure despite its phenomenal growth rate.

Let's see why that's the case, and check if Sandisk's recent weakness is a buying opportunity for savvy investors.

Image source: The Motley Fool.

Sandisk stock is suffering from negative investor perception

Sandisk's recent slide has nothing to do with the company's financial performance. Instead, investors have been booking profits in this memory specialist owing to the rotation out of this sector. The Roundhill Memory ETF, for instance, is down by 19% over the past month.

Concerns about the cyclical nature of the memory industry, which has been prone to oversupply in the past, along with worries about increasing competition from Chinese memory manufacturers, and the sustainability of the heavy spending on artificial intelligence (AI) infrastructure have weakened investor confidence in Sandisk stock.

Additionally, analysts' lofty expectations have created more pressure on Sandisk. Though the company delivered phenomenal revenue and earnings growth last quarter, its outlook missed expectations. That didn't sit well with investors, who seem to be missing the bigger picture.

After all, Sandisk reported a 175% year-over-year increase in revenue in fiscal 2026 to $20.2 billion, while its adjusted earnings per share jumped by nearly 24x to $70.88. What's more, Sandisk's guidance of $10.3 billion to $10.8 billion in revenue for the current quarter points to another year of solid growth.

The midpoint of its revenue guidance indicates that its top line is on track to increase by 4.5x year over year. Also, Sandisk expects non-GAAP earnings per share of $45.00 in the current quarter, which would be a massive jump over the prior year period's reading of $1.22. Sandisk's guidance clearly suggests that its recent sell-off isn't justified, especially considering that its long-term revenue pipeline has increased considerably.

Sandisk reported that it has signed multi-year supply agreements with eight data center customers. Management added on the conference call that these long-term agreements will account for more than half of its NAND flash bit shipments in fiscal 2027. The company estimates that the multi-year agreements will account for two-thirds of its bit shipments in fiscal 2028.

Importantly, these long-term agreements will guarantee phenomenal growth for Sandisk. That's because the company expects at least $94 billion in revenue from these agreements based on floor pricing, a number that could jump higher if the impressive NAND flash price growth continues. So, the minimum-price agreements that Sandisk has in place with customers over the next four to five years should guarantee healthy revenue growth for the company and potentially protect it from downward price swings.

Wall Street expects a big jump in Sandisk stock

It is evident by now that Sandisk is on track to clock a big jump in its revenue and earnings in fiscal 2027. Analysts expect its revenue to jump by 141% to almost $49 billion, while earnings are expected to triple to $213.23 per share.

This phenomenal increase in Sandisk's top and bottom lines explains why this AI stock carries a 12-month median price target of $2,150, representing potential upside of 69% from current levels. However, Sandisk could exceed those expectations, as it deserves to trade at a significant premium to its forward earnings multiple of 19. The S&P 500 index has a forward price-to-earnings ratio of 21.3, but it is expected to clock average earnings growth of 30% this year.

Sandisk's earnings are poised to grow at a significantly faster pace than the S&P 500's in the current fiscal year, which is why I think it should be trading at a premium to the index. However, even if Sandisk trades at 21.3 times earnings after a year, in line with the S&P 500 index, its stock price could jump to $4,542 in a year (assuming it can indeed achieve $213.23 in earnings per share this year).

That's a potential jump of 3.5x from current levels, indicating that Sandisk's recent slide is an opportunity for investors to buy a growth stock on the cheap, and doing so could be a smart thing to do right now, considering the potential upside on offer over the coming year.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Palantir Technologies (NASDAQ: PLTR) stock regained its mojo after the company released its second-quarter results on Aug. 3, with shares of the software specialist rising more than 29% the following day.

It was easy to see why that was the case. I was expecting Palantir stock to go parabolic following its earnings release, primarily due to its considerable influence in the artificial intelligence (AI) software market and a solid revenue pipeline that's driving robust growth acceleration.

The good news for Palantir investors is that this AI stock has sustained its momentum following its latest results. Specifically, Palantir's shares have jumped 39% since its earnings release. I won't be surprised to see the stock sustain its solid momentum over the coming year and hit $300.

Let's see why that may be the case.

Image source: The Motley Fool.

Palantir's accelerating growth should be rewarded with more upside

Palantir's Q2 revenue jumped 93% year over year to $1.94 billion, easily surpassing the consensus estimate of $1.8 billion. Its non-GAAP earnings per share jumped by 2.5x year over year to $0.41, driven by a solid expansion in spending by Palantir's customers.

Palantir's total contract value (TCV) increased by 49% year over year in Q2 to $3.38 billion, exceeding the overall jump in the company's top line. This clearly indicates that Palantir is getting more business than it can fulfill right now, and that's helping the company build a solid long-term revenue pipeline.

Palantir reported that its remaining deal value (RDV), which refers to the total value of unfulfilled contracts at the end of a quarter, increased by 83% year over year in Q2 to $13.1 billion. This strong revenue pipeline explains why Palantir now expects full-year revenue to increase to $8.15 billion, up from the earlier estimate of $7.65 billion.

The updated guidance points to a potential increase of 82% from last year. It is worth noting that Palantir's top line increased by 56% in 2025. Palantir is benefiting from an increase in its customer count and a jump in spending by existing customers. The company's net dollar retention rate stood at an impressive 157% last quarter, up 700 basis points from the previous quarter.

This metric compares the trailing-twelve-month (TTM) revenue from Palantir's customers at the end of a quarter to the TTM revenue from the same customer cohort in the year-ago period. So, a reading above 100% means Palantir's customers are now spending more on its offerings. A jump in the net dollar retention rate points toward stronger adoption of its generative AI software solutions.

Here's why Palantir is headed to $300

Analysts seem to be underestimating Palantir's growth potential. The stock has a 12-month median price target of $203, according to 35 analysts covering Palantir. That suggests a 16% jump from current levels.

It is worth noting that analysts expect Palantir's top-line growth to slow down to 49% in 2027 to $12.17 billion. However, such a slowdown seems unlikely given Palantir's growing revenue pipeline and the fact that it added 200 new customers last quarter, which can increase usage of its offerings and drive stronger growth.

Assuming Palantir's 2027 revenue growth matches its 2026 growth forecast of 82%, its top line could hit almost $15 billion next year. Palantir stock is currently trading at a pricey 73 times sales, though that valuation is justified by Palantir's accelerating growth and future potential. But even if Palantir trades at 50 times sales at the end of 2027 and achieves $15 billion in revenue, its market cap could hit $750 billion.

That's 78% above its current market cap and will be enough to push Palantir's stock price beyond $300. So, buying this high-flying tech stock right now could be a smart move for investors looking to capitalize on the fast-growing demand for generative AI software, as Palantir seems capable of sustaining its momentum and making investors richer over the next year and a half.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Tech giants Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) have posted a disappointing stock market performance so far in 2026, with shares of both companies in the red as of this writing.

While Meta Platforms is down 14% this year, Microsoft has dropped 2%. Both Magnificent Seven stocks recently reported their quarterly results, and there was a stark contrast in the way the market reacted to their earnings reports. Let's see why that was the case.

Image source: The Motley Fool.

Microsoft stock soars after a solid report

Shares of Microsoft popped more than 15% after the company released its fiscal 2026 fourth-quarter results (for the three months ended June 30) on July 29. Investors were happy with Microsoft's forecast that it will remain cash flow positive in fiscal 2027 despite investments in infrastructure to meet the growing demand for its artificial intelligence (AI) services.

Microsoft projects $175 billion in capex for calendar 2026, below the $190 billion analyst estimate. It is also worth noting that Microsoft management remarked on the latest earnings call that its fiscal 2027 capex will increase year over year. So, the company's focus on prudently spending cash to build AI infrastructure has boosted investors' confidence in the stock, which explains the post-earnings pop.

Microsoft posted $332 billion in revenue in fiscal 2026, up by 18% from the prior year. Additionally, the company's non-GAAP earnings per share (EPS) increased by 22% year over year to $17.28. The tech giant has a large enough backlog to sustain healthy growth over the long run. It reported $678 billion in commercial remaining performance obligation (RPO) last quarter. The metric, which refers to the total value of contracts yet to be fulfilled at the end of a quarter, increased by 84%.

This tremendous backlog should support robust growth in Microsoft's cloud business over the long run, while the company's focus on keeping spending at reasonable levels should support bottom-line growth. This is why analysts have become bullish about Microsoft's earnings growth prospects.

Data by YCharts

The chart above indicates that Microsoft's earnings growth will eventually accelerate, which could set this tech stock up for healthy long-term gains.

Meta's aggressive spending has spooked investors

Meta released its second-quarter results on July 29, the same day as Microsoft, but its stock headed in the opposite direction and fell over 9% the following day. It was easy to see why that was the case.

Though Meta's Q2 revenue increased 28% year over year to $60.8 billion, its net income fell 14%. Meta's earnings per share of $6.18 landed well below the $7.22 consensus estimate. The company's aggressive AI infrastructure build-out led to a severe dent in the free cash flow, which fell to $784 million from $8.55 billion a year ago.

CEO Mark Zuckerberg pointed out on an earnings call with analysts that the company will "continue to invest aggressively in infrastructure" to support the growing demand for AI in its products and services. The company has narrowed its 2026 capex guidance to a range of $130 billion to $145 billion from the earlier range of $125 billion to $145 billion.

The higher floor suggests a 90% increase in capex this year at the midpoint, compared to last year's outlay of $72.2 billion. This increased spending explains why analysts have been reducing their bottom-line estimates for Meta. Consensus estimates project a 3% increase in Meta's earnings per share in 2026 to $32.12.

The earnings estimate was slightly higher at $33.07 per share a week ago. The EPS estimate for 2027 has also moved lower over the past week. So, the negative analyst sentiment could continue to weigh on Meta stock. Does this mean Microsoft is the better buy right now?

Which Magnificent Seven stock should you buy right now?

The discussion above indicates that Microsoft is currently poised to deliver stronger earnings growth than Meta. Also, investor sentiment is in Microsoft's favor following its latest quarterly report. Moreover, both stocks are almost in the same position when their valuations are considered, with Microsoft being slightly more expensive of the two.

Data by YCharts

So, it is easy to see that Microsoft is the better tech giant to buy right now, as its ability to deliver healthy earnings growth and attractive valuation should help it outperform Meta Platforms.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy.

Artificial intelligence (AI) stocks may have fallen out of favor over the past month for various reasons. However, the financial performance of companies involved in the build-out of AI data center infrastructure makes it increasingly clear that now is the time to capitalize on the pullback in AI stocks.

Goldman Sachs estimates that a whopping $7.6 trillion could be spent on AI data centers, computing hardware, and electricity between 2026 and 2031 in a base-case scenario. This historic infrastructure build-out can be attributed to AI's productivity gains. Anthropic, for instance, notes that using its Claude AI model could reduce the time taken to complete a task by 80%.

The pure-play AI company also points out that AI could increase labor productivity in the U.S. by 1.8% annually over the next decade. That's double the growth rate seen since 2019. These potential productivity gains explain why trillions of dollars will be spent on building AI infrastructure. Applied Digital (NASDAQ: APLD) is one of the best ways to capitalize on this lucrative market.

Let's look at the reasons why.

Image source: Getty Images.

Applied Digital is a critical cog in the AI infrastructure ecosystem

Applied Digital is a pick-and-shovel AI play. The company designs, builds, and operates dedicated AI data centers for customers such as CoreWeave and hyperscalers. Not surprisingly, the demand for Applied Digital's services is extremely robust, as evidenced by the company's contracts to build and lease out 1.4 gigawatts (GW) of data center capacity.

Applied Digital points out that these contracts represent total contracted lease revenue of $36 billion over the long run. What's more, the potential lease revenue from these contracts balloons to $86 billion if customers decide to exercise renewal options. It is worth noting that Applied Digital generally enters into 15-year take-or-pay lease contracts with customers.

The $36 billion in contracted long-term lease revenue is a massive figure considering that Applied Digital's revenue in the recently concluded fiscal 2026, which ended on May 31, stood at $611 million. The company's top line jumped by an impressive 167% in the latest fiscal year. However, Applied Digital's fiscal Q4 revenue shot up 5x year over year to $259 million, driven by recognition of lease revenue from data center projects it has already completed.

As Applied Digital builds and delivers more data centers to customers, it will be able to convert more of its contractual lease backlog into revenue. Even better, Applied Digital isn't restricting itself to the 1.4 GW of data centers that it is currently constructing. The company is looking to expand capacity at its current campuses and is also marketing an additional 1.7 GW of capacity across multiple states.

Given the strong demand for AI data center infrastructure, it won't be surprising to see Applied Digital finding clients for the additional capacity that it plans to sell in the future. As a result, the company's long-term lease revenue pipeline could get even bigger.

This stock is a multibagger hiding in plain sight

We have already seen that Applied Digital's revenue growth accelerated in the final quarter of fiscal 2026. Analysts, however, are anticipating a slowdown in Applied Digital's top-line growth in fiscal 2027 to just 16%.

Data by YCharts

But as the chart above tells us, Applied Digital's revenue growth will start accelerating from the next fiscal year. However, this AI infrastructure specialist could spring a positive surprise and exceed Wall Street's expectations, given the phenomenal growth it reported last quarter.

Applied Digital claims that the company has built a track record of delivering data center capacity on time and on budget. If the company maintains its discipline, it can indeed grow faster than Wall Street's expectations. However, even if Applied Digital's revenue grows in line with consensus estimates and its revenue increases to $2.7 billion in fiscal 2029 (as per consensus estimates), its market cap could get close to $23.5 billion. That is nearly 3x its current market cap.

I am assuming a price-to-sales ratio of 8.7 to calculate Applied Digital's market cap after three years, which is in line with the U.S. tech sector's average sales multiple. However, it has the potential to deliver bigger gains due to its solid lease revenue pipeline, which should result in a stronger-than-expected top-line jump. Also, the market could reward this AI stock with a richer valuation due to its terrific growth.

All this makes Applied Digital an ideal stock to buy and hold for the long run to capitalize on the AI infrastructure build-out.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.

Artificial intelligence (AI) stocks have taken a hammering lately, as investors have been rotating out of this sector due to multiple concerns, such as circular financing, competition from China, and the viability of the enormous sums being spent on AI data center infrastructure.

The Global X Artificial Intelligence & Technology ETF, an exchange-traded fund that invests in companies benefiting from the proliferation of AI by integrating this technology into their operations, along with companies selling AI-related hardware and software, has shed 8% of its value over the past month.

However, AI hardware specialists continue to clock impressive growth, suggesting that the recent downturn in this sector may not be long-lasting. Celestica (NYSE: CLS) is the latest company to report solid results and raise its annual guidance, following impressive reports from companies such as ASML and Taiwan Semiconductor Manufacturing in July.

This contract electronics manufacturer, which counts Broadcom (NASDAQ: AVGO), Intel, and Advanced Micro Devices as its key customers, has seen its shares slide 12% over the past three months. However, this pullback is an opportunity for savvy investors to buy a top AI stock at a really attractive valuation. Let's look at the reasons why.

Image source: Getty Images.

Celestica's revenue and earnings are increasing at a terrific pace

Celestica provides electronics manufacturing services (EMS) to various industries, such as data center and networking, aerospace and defense, healthcare, industrial, semiconductor manufacturing, and supply chain management. Its connectivity and cloud solutions (CCS) business has been experiencing outstanding growth lately, driven by robust demand for its networking switches deployed by the leading chip designers mentioned earlier.

This explains why Celestica's revenue increased by an impressive 62% year over year in Q2 to $4.7 billion. Even better, the company's earnings per share rose 83% year over year to $2.54. Celestica's guidance was the icing on the cake, with the company now expecting 2026 revenue to land at $20.5 billion, up from its prior guidance of $19 billion. It has also raised its non-GAAP earnings per share guidance to $11.30 from the earlier estimate of $10.15.

The updated guidance points toward a 65% jump in revenue from last year. Meanwhile, earnings per share are now expected to grow by 87%. More importantly, Celestica management noted in its earnings press release that its revenue growth rate will accelerate next year. Its adjusted earnings per share will continue to grow faster than revenue in 2027.

I won't be surprised to see Celestica's growth accelerating beyond next year, thanks to its partnerships with the likes of Broadcom, Intel, and AMD. Broadcom, for instance, reported a 143% year-over-year increase in its AI semiconductor revenue in the previous quarter to $10.8 billion. The company anticipates a 200% year-over-year increase in AI revenue in the current quarter to $16 billion.

What's more, Broadcom is confident of achieving more than $100 billion in AI revenue next year, indicating a significant improvement in the quarterly revenue growth rate of its AI business. Also, Broadcom has lucrative long-term agreements to deploy custom AI processors for major hyperscalers, which will be a tailwind for Celestica.

So, it is easy to see why analysts have become even more bullish regarding Celestica's bottom-line growth prospects over the next three years.

Data by YCharts

The stock's valuation and upside potential make it a no-brainer buy

The recent slide in Celestica's shares explains why it is trading at 36 times earnings, a small premium to the tech-laden Nasdaq-100 index's earnings multiple of 33. The stock should ideally trade at a larger premium, given the impressive earnings growth it is clocking and the sharp earnings jump Celestica could deliver through 2028.

Assuming Celestica's earnings reach $26.96 per share in 2028, and it trades in line with the Nasdaq-100 index's multiple of 33 at that time, its stock price could jump to $890. That's nearly 2.7x its current stock price, suggesting that investors should consider buying this tech stock before it starts soaring.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Broadcom, Celestica, and Intel. The Motley Fool has a disclosure policy.

Micron Technology (NASDAQ: MU) has been one of the hottest performers on the stock market over the past year, but its shares have witnessed a substantial pullback after reaching a 52-week high on June 25.

Specifically, Micron stock is down nearly 28% from its 52-week high. This steep slide in the memory specialist's shares is quite surprising when we consider that it reported incredible results toward the end of June, along with impressive guidance. Clearly, external factors are impacting this high-growth company.

Let's take a closer look at them and consider what investors can do with Micron stock following its pullback.

Image source: Micron Technology.

These factors have been pushing Micron stock down lately

While the fundamentals powering Micron's growth haven't changed, news that the company could now face competition from Chinese state-backed memory company ChangXin Memory Technologies, or CXMT, has spooked investors lately. CXMT recently went public in China, and it is worth noting that Apple has reportedly applied for permission to purchase memory from it.

Moreover, China is reportedly making advanced chipmaking equipment, which could threaten the dominance of South Korean and U.S.-based memory manufacturers, including Micron. At the same time, persistent concerns about the viability of the huge sums being spent by big tech companies on developing artificial intelligence (AI) infrastructure have also weighed on Micron stock.

So, Micron has been caught in a whirlpool of negative news lately, causing the stock to tumble. However, savvy investors should look past the noise and focus on the primary factor that has made Micron a multibagger investment over the past year or so -- the memory market's fundamentals.

Favorable memory demand-supply dynamics will help the stock regain its mojo

While the market may be having second thoughts about Micron amid intensifying competition and potential overspending on AI infrastructure, analysts remain bullish on its prospects. This is evidenced by the following chart, which shows that analysts have consistently increased their long-term earnings-per-share growth estimates for the company.

Data by YCharts

It is easy to see why that's the case. Memory demand significantly outpaces supply, primarily due to the massive memory needs of AI data centers, which require faster compute and large amounts of storage. SK Hynix projects that memory wafer demand will be 20% higher than supply until 2030, and the company also adds that the shortage could persist into the next decade.

So, even if Chinese memory manufacturers bring more supply to the market, undersupply is likely to persist. After all, shipments of personal computers and smartphones are taking a hit due to higher memory prices and limited supply, creating pent-up demand in these markets. So, Micron's addressable market remains robust, and that's precisely why the company's earnings growth is projected to remain strong over the long run.

So, savvy investors can consider using the recent pullback in Micron to buy more shares, as it trades at just 19.5 times earnings. The forward earnings multiple of 5.4 is even more attractive, indicating that Micron is extremely undervalued when the company's impressive growth potential is considered. All this makes this AI stock a no-brainer buy, especially given that it is showing signs of stepping on the gas again after an 18% pop on July 30.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Micron Technology. The Motley Fool has a disclosure policy.

Micron Technology and Sandisk have benefited significantly from the memory chip boom over the past year, as the demand for the dynamic random-access memory (DRAM) and NAND flash storage chips they manufacture has significantly exceeded supply.

Of course, investors have been rotating out of memory stocks lately, as evidenced by the 27% decline in the Roundhill Memory ETF over the past month. Both Micron and Sandisk have witnessed significant pullbacks in their stock prices over this period. However, the artificial intelligence (AI)-fueled memory chip demand isn't going to fade away any time soon.

According to Deloitte, the memory crunch is unlikely to ease until 2029. While that's great news for both Micron and Sandisk, there is another company that's benefiting from the incredible memory demand -- Lam Research (NASDAQ: LRCX). Let's look at the reasons why this semiconductor stock could become the biggest winner of the AI-driven memory boom.

Image source: Getty Images.

The memory boom has given Lam Research a big shot in the arm

Lam Research sells the equipment that allows Micron and Sandisk to manufacture DRAM and NAND flash chips. The company also serves the foundry and logic end markets, though 46% of its revenue comes from sales of memory manufacturing equipment.

Deloitte estimates that the three largest memory makers in the world -- Samsung, SK Hynix, and Micron -- are going to increase their combined capital expenditure by a whopping 340% between 2024 and 2027. In all, the three companies could increase their capex to $146 billion in 2027 from $58 billion in 2025.

This explains why Lam Research has been experiencing robust growth. The company's revenue increased by 26% year over year in the recently concluded fiscal 2026 (which ended on June 28) to $23.2 billion. Its net income jumped by 35% year over year to $7.26 billion. It ended the fiscal year with a 30% year-over-year increase in Q4 revenue, indicating accelerating growth.

Lam Research expects $8.1 billion in revenue for the current quarter, along with non-GAAP earnings per share of $2.15. That points to a year-over-year increase of 52% in revenue, while adjusted earnings are projected to jump by nearly 71%. So, Lam seems on track to clock much faster growth during the current fiscal year, and it won't be surprising to see it sustain such terrific momentum over the long run as well.

We have already seen that memory capex could jump to $146 billion next year. This figure could keep soaring in the long run, as the memory shortage is expected to persist into the next decade, according to SK Hynix. That's why Micron recently hiked its U.S. capex budget by $50 billion to $250 billion through 2035.

On the other hand, South Korea is reportedly planning an enormous $880 billion investment in semiconductors and AI data centers over the next decade, backed by Samsung and SK Hynix. So, Lam Research is sitting on a massive addressable market as memory makers and semiconductor manufacturers spend heavily to boost production capacity.

All this explains why Bank of America is projecting wafer fab equipment (WFE) spending to hit $250 billion in 2028 and $292 billion in 2030. The points discussed above suggest that Lam's addressable market will continue growing beyond the decade, and that's precisely why I think this AI stock is poised for impressive long-term gains.

The company's growth potential points toward healthy stock price upside

Lam's revenue forecast for the first quarter of fiscal 2027 points toward a significant acceleration in growth. Analysts were expecting $7.09 billion in revenue from the company in the current quarter, along with earnings per share of $1.83. However, it blew past those expectations, a trend that's likely to continue over the long run as its addressable opportunity expands.

After all, Lam sells its equipment to the likes of Taiwan Semiconductor Manufacturing, Samsung, Micron, and others, all of whom are increasing their capex. So, it is easy to see why analysts have become bullish about Lam's growth prospects following its latest quarterly report.

Data by YCharts

Assuming Lam's earnings per share jump to $13.80 after three years and it trades at 33 times earnings at that time, in line with the tech-laden Nasdaq-100 index's average earnings multiple, its stock price could reach $455. That's a potential 50% upside from current levels. However, don't be surprised to see the company do much better than that, as it could deliver a stronger-than-expected earnings jump amid robust capital spending, which could lead the market to reward it with a premium valuation.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lam Research, Micron Technology, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Shares of Advanced Micro Devices (NASDAQ: AMD) have shot up by a remarkable 364% over the past five years, outpacing the 68% jump in the tech-laden Nasdaq Composite index during the same period.

A big chunk of AMD's gains came over the past year and a half, once it became evident that the chip designer was poised to capitalize on the booming demand for AI chips in data centers and personal computers. The good news for AMD stock investors is that the catalysts driving its robust rally are getting stronger.

I will take a closer look at a couple of key trends that have supercharged this semiconductor stock over the past year and explain why they point toward terrific gains for investors through the end of the decade.

Image source: AMD.

AMD's tailwinds are getting stronger than before

At its Financial Analyst Day held in November 2025, AMD noted that the server central processing unit (CPU) market grew at a compound annual growth rate (CAGR) of just 4% between 2022 and 2024. The total addressable market (TAM) for server CPUs was $20 billion at the end of 2024, but it grew at a significantly faster pace of 30% in 2025 to $26 billion.

Agentic AI and inference applications drove this impressive uptick in the server CPU TAM last year. These workloads don't require the raw parallel processing power offered by graphics processing units (GPUs), an area where AMD failed to make a mark when the AI revolution kicked off in 2022.

However, CPUs play a central role in inference and agentic AI applications by managing GPUs and ensuring that other AI accelerator chips remain productive. As a result, AMD is now anticipating a significant bump in server CPU TAM over the long run. The company estimated that the server CPU market could clock an 18% CAGR between 2024 and 2030, reaching $60 billion in annual revenue by the end of the decade.

However, it significantly increased the TAM forecast at the recently held Advancing AI event. AMD now expects the server CPU market to hit an impressive $220 billion by the end of 2030. That's a 4x jump over AMD's prior estimate, and points toward a CAGR of 50%. Importantly, AMD now controls 46% revenue share of server CPUs, which is quite impressive considering that it reentered this market in 2017. Even better, AMD has consistently been taking market share from Intel in server CPUs.

Assuming it controls half of the server CPU market by the end of 2030, it could generate $110 billion in revenue from this segment. For comparison, AMD has generated $37.5 billion in revenue over the trailing twelve months, and the server CPU market alone could help it triple its top line in the next five years.

Moreover, AMD sees its overall data center accelerator TAM increasing by 7x over the next five years to $1.4 trillion in 2030. That translates into a 45% CAGR. The good news is that AMD seems well-positioned to capture a larger share of this lucrative opportunity. The company's data center GPUs are reportedly 30% to 50% cheaper than Nvidia, and that could help it significantly increase its data center GPU market share from current levels of around 5% to 7%.

Analysts estimate that its share could reach 10% by the end of 2026, with further gains possible by the end of the decade. As such, AMD now seems primed for stronger growth over the next five years. The company's revenue increased by 34% in 2025, and analysts are expecting a much stronger increase of 43.5% in the current fiscal year to $49.7 billion.

The next couple of years point to major improvements in the company's top line, potentially setting it up for phenomenal upside through the end of the decade.

Data by YCharts

The stock still has multibagger potential

We have seen that this AI stock has been a multibagger over the past five years. Looking ahead, its tremendous earnings growth could help it replicate such a performance.

Consensus estimates project AMD's revenue to hit $109.2 billion in 2028, as seen in the previous chart. That's a three-year CAGR of 46%, using the company's 2025 revenue of $34.6 billion as the base. Assuming AMD's top line increases at a relatively conservative pace 30% in 2029 and 2030, its revenue could land at $184.5 billion by the end of the decade.

AMD currently has a price-to-sales ratio of 22, which is a premium to the U.S. tech sector's average sales multiple of 7.3. However, AMD's accelerating growth justifies its premium. But even if it trades at a discounted 15 times sales after five years, its market cap could increase to $2.77 trillion. That's 3.6x AMD's current market cap, indicating that investors can still buy and hold this semiconductor stock for the long run in anticipation of solid gains.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool has a disclosure policy.

Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD) have outperformed Nvidia (NASDAQ: NVDA) so far in 2026. However, Nvidia is coming after one of Intel and AMD's most important businesses, which could derail their momentum.

Earlier this year, it emerged that Nvidia will start selling its Vera server central processing units (CPUs) as a stand-alone product to customers. It now appears that the company has already started making a solid dent in this market, according to a report by Tom's Hardware, and that doesn't bode well for Intel and AMD.

Image source: Getty Images.

Nvidia's stand-alone CPU server business seems to have gotten off to a terrific start

Nvidia's vice president of hyperscale and high-performance computing, Ian Buck, told Tom's Hardware that the company has already shipped "hundreds of thousands of Grace stand-alone servers." It is worth noting that the chip giant had shipped more than 2.5 million units of its Grace server CPUs by May this year. It entered into a partnership with Meta Platforms in February to deploy stand-alone Grace CPUs in AI data centers.

And now, Nvidia is set to double down on the server CPU market with the even more powerful Vera chip. Nvidia claims that the Vera CPU has a 1.5x performance advantage over the Grace CPU. Even better, the company claims it is 50% faster than chips built on the x86 architecture, used by Intel and AMD.

Another important point is that Nvidia has already begun delivering the Vera CPUs to customers, including OpenAI, Anthropic, and Space Exploration Technologies. It won't be surprising to see this chip gaining more popularity. That's because Meta was seeing a 2x jump in performance-per-watt on the Grace platform, and the Vera CPU could help customers enjoy a bigger performance advantage.

As a result, Intel and AMD's dominance of the server CPU market could take a hit.

Why Nvidia's CPU push is bad news for Intel and AMD

According to Mercury Research, server CPUs built on the Arm architecture accounted for 13.2% of the overall server CPU market at the end of 2025. What's worth noting is that Arm server CPU shipments doubled year over year in Q4 last year, primarily driven by the popularity of Nvidia's Grace CPUs.

However, Arm-based CPUs could capture almost 90% of the server CPU market by 2029, according to Counterpoint Research. It won't be surprising to see that happen if Nvidia can indeed deliver the performance gains it claims over x86 processors. Moreover, we have already seen that the company's customer base in server CPUs is indeed expanding, and that doesn't bode well for Intel and AMD.

Intel reported a 59% year-over-year increase in its data center and AI (DCAI) revenue in the second quarter of 2026 to $6.3 billion. The company noted in its earnings call that its Xeon 6 server CPU is "one of the fastest ramping products" in its history. In fact, Intel reiterated that demand for its products continues to outpace supply.

AMD, meanwhile, is yet to release its Q2 report. However, the company's data center segment revenue was up 57% year over year in Q1 to $5.8 billion. AMD's data center revenue includes sales of both graphics cards and CPUs, while Intel's DCAI segment also includes sales of custom processors. So, the combined data center revenue of Intel and AMD in their last reported quarter was just over $12 billion, translating to an annual run rate of nearly $50 billion.

Nvidia is anticipating $20 billion in Vera server CPU revenue in the current fiscal year. That's impressive for a product that just started shipping to customers last month. So, Nvidia is on track to take a significant chunk out of Intel and AMD's addressable opportunity in the data center chip space. What's more, Nvidia sees a $200 billion long-term revenue opportunity in server CPUs. If its Arm-based processors indeed capture a lion's share of the server CPU market over the next three to four years, Nvidia's revenue from this segment will increase substantially.

So, Intel and AMD's growth rates could take a hit as Nvidia's server CPUs gain more influence. This could help Nvidia stock regain its mojo and outperform its competitors, especially given that it trades at a significantly lower valuation.

Data by YCharts

All this makes Nvidia the better semiconductor stock to buy right now for investors looking to capitalize on the AI infrastructure boom.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.

Though shares of Sandisk (NASDAQ: SNDK) have been under pressure lately, the stock remains one of the top performers on the market over the past year, with gains of over 2,300%, as of this writing.

Sandisk's tremendous gains this year have been driven by a significant surge in the price of NAND flash memory, as the demand for these storage chips has significantly outpaced supply. Artificial intelligence (AI) data center servers are expected to account for 44% of the overall NAND flash demand in 2026, according to market research firm TrendForce.

This AI data center-fueled demand has been the primary factor driving Sandisk's remarkable surge on the stock market. The good news for Sandisk investors is that this historical trend powering the semiconductor stock's tremendous rally is sustainable, and that may help the stock deliver more upside over the next couple of years.

Image source: Getty Images.

NAND flash demand from AI servers is poised to get stronger

AI servers have been using NAND flash-based enterprise solid-state drives (SSDs) to store data for AI workloads amid a severe shortage of traditional hard disk drives (HDDs). Tom's Hardware reported in November 2025 that enterprise-grade HDDs have been on backorder for two years. That shortage may have worsened in 2026 as hyperscalers have been aggressively increasing their outlay on AI data centers, creating stronger SSD demand.

Precedence Research predicts that the AI-powered storage market could jump from just $36 billion in 2025 to $255 billion in 2034, clocking a compound annual growth rate (CAGR) of 24%. However, the supply isn't expected to catch up, with memory giant SK Hynix recently pointing out that memory demand could continue to exceed supply beyond 2030.

Moreover, AI servers will continue to capture a larger share of the NAND flash market. TrendForce estimates that AI data centers will account for 51% of NAND flash demand in 2027. As a result, the historical increase in NAND flash prices that has led to a stunning rally in Sandisk stock seems sustainable.

Phison Electronics, which manufactures NAND flash storage controllers, noted in November 2025 that NAND flash prices more than doubled in the second half of 2026. Gartner is projecting a 234% increase in NAND flash prices this year, which isn't surprising as demand is expected to exceed supply by 4% to 5% in 2026.

As the share of AI servers in NAND flash demand increases to 51% next year, and the number of wafer starts drops by 29% in 2026 and 2027 compared with 2024 levels, according to Taiwan-based consulting firm Isaiah Research, the price of Sandisk's products could continue increasing over the next couple of years. According to another estimate, both SK Hynix and Samsung reduced their NAND flash wafer output in 2025 to serve the fast-growing high-bandwidth memory (HBM) market.

The addition of new NAND flash capacity usually takes 18 months to 24 months, or even longer. So, the rapid increase in NAND flash prices that has led to a big jump in Sandisk's margins over the past year is here to stay.

Data by YCharts

Not surprisingly, analysts anticipate Sandisk to maintain outstanding earnings-per-share growth over the long run as well.

Data by YCharts

The next couple of years should make Sandisk investors richer

As NAND flash demand is projected to continue outstripping supply for the next two years, analysts have become more bullish about Sandisk's earnings growth prospects over this period.

Data by YCharts

The above chart shows that Sandisk's earnings per share could increase by 20% in fiscal 2028 (which will end in June 2028). Of course, that's slower than the projected increase of 219% in Sandisk's earnings per share in the ongoing fiscal year, but don't be surprised to see the company exceeding expectations. That's because Sandisk is striking lucrative long-term agreements with variable pricing options, which are helping it build a solid revenue pipeline with the ability to capture potential memory price increments over the long run.

Assuming Sandisk's earnings reach $255.63 at the end of fiscal 2028 and it trades at even 20 times earnings at that time (a discount to the Nasdaq-100 index's forward earnings multiple of 25), its stock price could increase to just over $5,110. That's almost 5x of where this AI stock is right now, which is why investors can consider buying Sandisk following its 51% decline over the past month.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

The exponential growth in earnings registered by Micron Technology (NASDAQ: MU) over the past year has translated into solid gains on the stock market, with shares of the memory giant up by a whopping 637% during this period.

The incredible demand for memory and the accompanying shortage of dynamic random-access memory (DRAM) and NAND flash storage have fueled the company's remarkable surge. Micron stock has benefited from a parabolic jump in memory prices. You may now be wondering if this high-flying chipmaker can continue skyrocketing.

The good news is that it can indeed sustain its red-hot rally well into 2027. To see why that's likely to be the case, we will need to take a closer look at the primary catalyst that has sent this semiconductor stock soaring over the past year.

Image source: Micron Technology.

Rising memory prices have fueled Micron's rally, and the trend is here to stay

Artificial intelligence (AI) data centers need faster compute memory and ample storage to run training, inference, and agentic AI workloads efficiently. As a result, the demand for DRAM and NAND flash memory has taken off. High-bandwidth memory (HBM), in particular, has created a huge supply shortage as it requires three times the wafer capacity needed to manufacture conventional DRAM, according to Bank of America.

HBM is critical in AI accelerators, enabling the rapid transport of large data sets with low power consumption. Chip designers have been packing in more HBM into custom processors, graphics cards, and even server processors to ensure these chips don't sit idle. Not surprisingly, the HBM market is anticipated to grow by a whopping 7x by 2030, generating $246 billion in revenue by the end of the decade.

However, the booming demand for HBM has created a ripple effect across the memory industry. The wafer-intensive nature of these chips has created a shortage of traditional DRAM and NAND flash, as memory makers have been prioritizing HBM production to increase profits. This is why NAND flash prices nearly doubled over the final six months of 2026, according to Taiwan-based Phison, which manufactures NAND flash controllers.

Meanwhile, DRAM prices reportedly surged 170% last year, according to a third-party estimate. This historical trend of higher memory prices has been the primary catalyst behind Micron's astronomical jump, and there is ample evidence that prices will strengthen further, leading to more upside in this semiconductor stock.

SK Hynix, for instance, expects the memory crunch to worsen next year, even after capacity additions. As demand continues to outpace supply, prices should ideally continue rising. Market research provider Gartner projects a 125% spike in DRAM prices this year, while NAND flash could see a stronger jump of 234%.

If the supply crunch indeed worsens, Micron investors can expect further growth in earnings and margins on account of stronger pricing following a strong jump over the past year.

Data by YCharts

A solid spike in earnings suggests more upside in 2027

Micron's earnings are expected to increase by nearly 9x in the current fiscal year to $73.44 per share, according to consensus estimates. The company's fiscal 2026 will end next month. For fiscal 2027, which ends in August next year, analysts expect its earnings to more than double.

Data by YCharts

While that represents a slower increase from fiscal 2026 levels, the projected earnings growth for next year is still quite impressive. Of course, Micron can clock stronger earnings growth for the reasons discussed above, but even the projected bottom-line jump points to significant upside.

Micron trades at 22 times trailing earnings right now. That's higher than the stock's three-year median price-to-earnings ratio of 14.5, as per YCharts. Assuming Micron trades at 14.5 times earnings after a year and clocks $153.74 in earnings per share, its stock price could jump to $2,229. That's a potential upside of 2.8x in just over a year.

So, this AI stock seems primed for another multibagger performance over the coming year, suggesting that savvy investors should consider buying it following its recent dip.

Bank of America is an advertising partner of Motley Fool Money. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

SoundHound AI (NASDAQ: SOUN) stock has taken a severe beating so far this year, losing nearly 40% of its value as of this writing. Shares of the company that provides conversational artificial intelligence (AI) solutions to customers are now trading close to their 52-week low, but what's worth noting is that the steep drop in SoundHound's stock price doesn't seem justified.

After all, SoundHound operates in the fast-growing conversational AI market, where demand for agentic AI solutions is rising rapidly. Additionally, SoundHound's results have been solid in recent quarters, and the company is pulling the right strings to ensure that it remains a key player in the conversational AI space.

We will take a closer look at the company's prospects in this article and check if it is worth investing $1,000 in this AI stock in anticipation of a turnaround in its fortunes.

Image source: The Motley Fool.

SoundHound AI's robust growth doesn't justify the stock's slide

When SoundHound AI released its Q1 results in May this year, it reported a 52% year-over-year increase in revenue to $44.2 million. The company also announced the acquisition of conversational AI solutions provider LivePerson to strengthen its voice and agentic AI offerings. This seems like a smart move that should ideally bolster SoundHound's growth.

LivePerson's conversational AI and customer engagement platform helps clients automate and manage customer interactions across messages, social media applications, and voice. The company serves multiple verticals, including retail, financial services, healthcare, automotive, and travel and hospitality. SoundHound notes that this acquisition is a good fit and will enhance its addressable revenue opportunity by $500 million.

The LivePerson acquisition is anticipated to close in the second half of 2026, and SoundHound estimates it will contribute at least $100 million in additional revenue in 2027 from its existing customer base. In all, SoundHound expects its 2027 revenue to land in the $350 million-$400 million range, at least. For comparison, SoundHound's 2026 revenue is expected to land at $232 million, according to consensus estimates.

That would be a 37% increase over last year. So, SoundHound's 2027 revenue estimate points to a significant acceleration in growth next year, though don't be surprised to see the company exceeding expectations since the acquisition will also open cross-selling opportunities. Also, SoundHound's focus on bolstering its conversational AI platform through the acquisition of LivePerson should strengthen its position in the fast-growing conversational AI space.

The company was recently named a leader in conversational AI by market research firm Gartner, which explains why it has been growing faster than the market it operates in. Grand View Research predicts that the conversational AI market will experience annual growth of almost 24% through 2033, growing from $17.7 billion in revenue this year to almost $79 billion at the end of the forecast period.

So, SoundHound is making the right moves to capitalize on this multibillion-dollar opportunity in the long run. Also, the potential acceleration in its revenue growth in 2027 could spark a turnaround in this tech stock following a poor performance so far this year.

In fact, analysts expect SoundHound to deliver impressive gains over the coming year, which is why it may be a good idea to invest $1,000 of your investible cash into this company.

Wall Street expects the stock to jump substantially

SoundHound AI has a 12-month median price target of $12, according to nine analysts covering the stock. That points to potential gains of 87% over the next year. What's more, seven of the analysts covering SoundHound rate it as a buy, which isn't surprising considering the points discussed in this article.

So, a $1,000 investment in SoundHound could be worth almost $1,900 in a year, and I won't be surprised to see it indeed living up to Wall Street's expectations. SoundHound's slide in 2026 means that investors can now buy it at 14.4 times sales, a significant discount to its price-to-sales ratio of 26.6 at the end of 2025.

Of course, SoundHound trades at a premium to the U.S. technology sector's average sales multiple of 7.3, but the potential jump in its growth rate next year justifies that valuation. If the company achieves $400 million in revenue in 2027 and maintains its sales multiple of 14.4 by year-end, its market cap could reach $5.8 billion.

That's just over double SoundHound's current market cap, which is why investors looking to invest $1,000 into a top AI stock should take a closer look at this name before it starts surging once again.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SoundHound AI. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

ASML Holding (NASDAQ: ASML) is one of the most important semiconductor companies in the world, as it manufactures advanced chipmaking equipment that's used by foundries and memory companies to fabricate cutting-edge chips.

ASML's extreme ultraviolet (EUV) lithography machines help customers produce chips with high transistor density, resulting in higher computing power and lower power consumption. These leading-edge chips are 7 nanometers (nm) or smaller. It is worth noting that chip designers and consumer electronics companies have been using advanced 5nm and 3nm process nodes to fabricate chips deployed in artificial intelligence (AI) data centers, smartphones, personal computers (PCs), and even gaming consoles.

As ASML is the only manufacturer of EUV lithography machines, it is witnessing solid demand for its products. The company released its second-quarter results earlier this month, and they clearly indicate that it is poised to deliver years of solid growth.

Let's look at the reasons why this semiconductor stock seems primed to deliver solid upside over the next three years, potentially hitting a $3,000 price during this period.

Image source: ASML.

ASML's addressable market will expand rapidly

ASML's Q2 revenue increased 21% year over year to 9.3 billion euros. It sold 86 new lithography systems during the quarter, up from 67 in the year-ago period. The company's earnings per share increased by an impressive 28% year over year to 7.59 euros per share.

The company's sales exceeded the higher end of its guidance range, driven by the growing demand for its advanced chipmaking equipment that's used for making AI chips. Importantly, ASML sees continued investments in advanced chipmaking capacity to support the AI infrastructure build-out. CEO Christophe Fouquet noted on the latest earnings call:

In logic, there is a continued investment, not only to enable the expansion of 3 nm capacity in support of the latest generation of AI accelerators, but also at both the 5 nm and the 4 nm nodes to support the diverse set of chips required by AI product. At the same time, the 2 nm node continues to ramp rapidly to support next generation HPC and mobile applications.

Fouquet added that its customers are planning to invest in even more advanced 1.4 nm chip nodes. As a result, the company expects its foundry-related revenue to increase by 25% in 2026. On the other hand, ASML is capitalizing on the memory supply crunch. The company notes that its memory customers are on track to significantly expand their production capacity in 2026 to fill the supply gap in the memory industry.

ASML notes that memory infrastructure expansion will continue beyond 2026. That's not surprising, as South Korean semiconductor giants SK Hynix and Samsung are expected to spend a whopping $870 billion in capex over the next decade to build more manufacturing capacity. ASML sees a 75% jump in memory-related sales this year, and it can continue experiencing impressive growth in this segment over the long run as memory manufacturers bring additional capacity online.

All this explains why ASML has increased its 2026 revenue guidance to a range of 43 billion euros to 45 billion euros. That's well above the company's revenue forecast of 34 billion euros to 39 billion euros at the beginning of the year. The midpoint of the current revenue guidance suggests that ASML's revenue is on track to increase by 35% this year, well above the 15% growth it reported last year.

The discussion above suggests that ASML can sustain this impressive growth beyond 2026. Industry association SEMI forecasts a 23% increase in sales of semiconductor manufacturing equipment in 2026 to $166 billion. It expects this market's revenue to increase to $229.5 billion in 2028. So, it is easy to see why analysts have increased their revenue growth expectations from ASML following its latest quarterly report.

Data by YCharts

The math behind ASML's $3,000 price target

The Dutch semiconductor bellwether's robust top-line growth will filter down to its bottom line as well. Consensus estimates project a 53% jump in ASML's earnings per share in 2026, followed by solid double-digit gains in 2027 and 2028.

Data by YCharts

However, the build-out of additional chipmaking capacity can help this semiconductor stock exceed expectations. However, even if ASML's earnings per share increase to $75.08 in 2028 and it trades at 40 times earnings at that time (in line with its forward price-to-earnings ratio), its stock price could jump to just over $3,000.

A forward earnings multiple of 40 seems conservative when we consider that the iShares Semiconductor ETF, an exchange-traded fund that tracks the semiconductor sector, has a price-to-earnings ratio of nearly 70. A $3,000 stock price suggests that ASML could jump 81% from current levels, which is why it seems like a good idea to buy this AI stock and hold it for the long run following its 10% slide in July.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and iShares Trust-iShares Semiconductor ETF. The Motley Fool has a disclosure policy.