Key Points
-
Memory demand is through the roof, and Micron has at least $100 billion in memory contracts over the next few years.
-
Nvidia is pursuing AI CPUs to tap into a potentially expanding hardware market in addition to its dominance in GPU processors.
- 10 stocks we like better than Micron Technology ›
Anthropic has already confidentially filed its initial public offering (IPO) prospectus with the Securities and Exchange Commission (SEC) and could go public as soon as October, according to some reports.
As a top AI company with a leading artificial intelligence (AI) model, the Anthropic IPO could certainly be popular with investors. But history shows that many IPO stocks gain just 4% in their first year, and additional research shows that three years out, they usually lag the market by about 4%.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
This means it’s likely that any initial surge of investor interest in Anthropic stock could peter out quickly.
Instead, putting your money into two tried-and-true AI stocks is probably a better bet. Here’s why buying and holding Micron Technology (NASDAQ: MU) and Nvidia (NASDAQ: NVDA) is a smart move.
Image source: Getty Images.
Micron’s memory is still very much in demand
Micron’s share price has been volatile lately as investors worry about whether the memory market can sustain more growth. They’re not wrong to question some of the AI spending by large tech companies, but ignoring the huge demand for memory processors is a mistake.
Micron’s CEO, Sanjay Mehrotra, said on the company’searnings callin June that he expects “tight conditions to persist” beyond 2027 due to AI-driven demand. This memory demand is what has spurred the company’s sales and pushed Micron’s gross margins up from 39% in the year-ago quarter to 85% currently.
Tech companies of all shapes and sizes can’t get enough of the memory they need, and it’s driving up prices and resulting in very impressive margins for Micron. The company’s fiscal third-quarter results show just how well this is working in Micron’s favor, with sales surging 345% to $41.5 billion and adjusted earnings per share (EPS) soaring more than 1,200% to $25.11.
And if that’s not enough to convince you of just how much demand there is for Micron’s memory processors, consider that the company has 16 signed contracts (referred to as Strategic Customer Agreements, or SCAs) worth more than $100 billion in total over their terms.
Management says the SCAs “significantly enhance the durability and predictability of Micron’s strong financial performance” and that the final amount will likely be even higher because the initial contract prices are based on baseline memory prices, which are likely to rise.
Nvidia is positioning itself to continue benefiting from AI
Nvidia has been a winning AI stock for years, with its graphics processing units (GPUs) a central part of AI data centers, accounting for 86% of the AI data center GPU market.
As tech companies have ramped up their AI spending — expected to reach roughly $750 billion this year alone — Nvidia’s sales and earnings have surged. The company’s revenue rose 85% to $81.6 billion in Q1 of fiscal 2027, and adjusted earnings jumped 140% from the year-ago quarter to $1.87 per share.
Some investors have worried the best days may be behind Nvidia, but they’re likely getting ahead of themselves. Nvidia CEO Jensen Huang said on the Q1earnings callthat “Demand has gone parabolic. The reason is simple: Agentic AI has arrived.”
The new focus on agentic AI and the tasks that it can perform has spurred Nvidia to develop its next-generation Vera central processing units (CPUs) for AI. Anthropic, Space Exploration Technologies, and OpenAI are evaluating the Vera CPUs right now, and Nvidia says the processor is twice as efficient and 50% faster for AI agents than silicon from Intel and AMD.
Nvidia is trying to spread its opportunities out with the Vera CPU by preparing for a potential wave of CPU sales for data centers as AI agents continue to expand.
If AI CPUs become the next big hardware boom, Nvidia appears poised to hop on the trend. Even if not, it can continue to benefit as the leading GPU designer for AI data centers.
Should you buy stock in Micron Technology right now?
Before you buy stock in Micron Technology, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Micron Technology wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $395,463!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,268,290!*
Now, it’s worth noting Stock Advisor’s total average return is 927% — a market-crushing outperformance compared to 211% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of August 5, 2026.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
