Top AI Stocks to Invest in This August
In the rapidly evolving world of artificial intelligence (AI), two tech titans – Micron Technology and Alphabet – are making significant strides in the AI sector, yet their stocks are currently seen as undervalued relative to their AI-driven potential.
Micron Technology's AI Growth Opportunities and Valuation
Micron, a key supplier of high-bandwidth memory (HBM), is essential for AI accelerators such as NVIDIA’s latest GPUs. Its HBM3E chips are critical for next-generation AI models. In Q3 fiscal 2025, Micron’s revenue soared to $8.8 billion, a 29% year-over-year increase, with its AI-related Compute and Networking segment growing 153% to $4.6 billion.
The AI memory market is expected to grow from $35 billion in 2025 to $100 billion by 2030, directly benefiting Micron’s top-line growth. Under the US CHIPS Act, Micron plans $150 billion in manufacturing and $50 billion in R&D to expand its AI-related production capacity, positioning it ahead of competitors like Samsung and SK Hynix.
Despite strong earnings growth (projected EPS up to $10.45 in fiscal 2026, a near tenfold increase from 2024), Micron trades at a comparatively low forward P/E of about 17, below peers like Nvidia (40x) and AMD (43x). This suggests the stock is undervalued given its accelerating AI demand and improving margins (non-GAAP gross margin rising from 28.1% to 39% in a year). Analysts see potential for the stock to approach $150 or even $200 if growth continues.
Alphabet's AI Growth Opportunities and Valuation
Alphabet (Google’s parent) is a leader in AI development through its AI-powered cloud services, search engine enhancements, and AI research (e.g., Google Bard, AI integration in ads and cloud). AI is integral to its core business transformation and unlocking new revenue streams across cloud, advertising, and enterprise AI solutions.
Despite being a key AI player, Alphabet’s stock is also viewed as undervalued compared to other AI-focused tech companies. This undervaluation reflects market caution amid regulatory scrutiny and broader tech sell-offs, leaving an opportunity for investors who believe in Alphabet’s AI potential.
Summary Table
| Company | AI Growth Driver | Key Metrics (2025-2026) | Valuation (Forward P/E) | Undervaluation Rationale | |----------------|-----------------------------------------|-----------------------------------------|-------------------------|-----------------------------------------------------------| | Micron Tech | High-bandwidth memory for AI hardware | Revenues $8.8B (Q3 FY25), FY26 EPS up to $10.45 | ~17x | Lower than peers; strong margin expansion; potential $150-200 target | | Alphabet (GOOG) | AI-powered cloud, search, ads, AI research | Strong AI integration across business units | Undervalued (compared to peers) | Market caution vs strong AI growth potential |
Both companies' stocks reflect market undervaluation driven by investor skepticism or near-term challenges, despite their pivotal roles in the AI ecosystem and robust growth prospects fueled by AI demand and investments. This creates attractive opportunities for investors focused on AI-driven long-term growth.
Modern smartphones ship with lots of extra memory to handle their built-in AI functions, hinting at the growing importance of companies like Micron and Alphabet in our increasingly AI-driven world. If you believe that AI will drive business growth for years to come, Micron and Alphabet should be on your short list of stocks to buy right now.
- In the context of the AI-driven growth of Micron Technology and Alphabet, it is worth considering investing in these companies due to their undervalued stocks, as both companies show significant potential for revenue growth in the AI sector.
- Despite encountering near-term challenges, Micron Technology and Alphabet, being key players in the AI ecosystem, present attractive investment opportunities for those focused on long-term growth driven by AI.
