The Best Trillion-Dollar Stock to Buy Right Now, According to Wall Street

Currently, 13 stocks traded on U.S. exchanges have a market capitalization of at least $1 trillion. Of those companies, Wall Street is most bullish on these three:

• Among 56 analysts, Micron Technology (NASDAQ:MU) has a median target price of $1,575 per share. That implies 70% upside from its current share price of $925.
• Among 53 analysts, Broadcom has a median target price of $525 per share. That implies 54% upside from its current share price of $329.
• Among 72 analysts, Nvidia has a median target price of $320 per share. That implies 45% upside from its current share price of $219.

The figures above suggest that Wall Street analysts view Micron as the best trillion-dollar stock to buy now. Here's what investors should know about the semiconductor company.

Image source: Getty Images.

Micron's profits are soaring due to a memory chip supply shortage

Micron is a semiconductor company that manufactures memory chips and data storage solutions built on NAND flash and DRAM technology, including high-bandwidth memory (HBM). Its products are used in data centers, mobile devices, personal computers, and automotive systems.

Memory chips are currently in short supply due to immense demand for artificial intelligence infrastructure. The immediate consequence of that supply shortage is that DRAM and NAND prices have more than doubled in the last two years, and Micron's financial results have been impeccable.

In the September quarter, Micron's revenue increased 379% to $54 billion, and non-GAAP earnings soared to $33.42 per diluted share, an 11-fold increase from $3.03 per diluted share last year. And investors have good reason to think the company will maintain similar momentum in the coming years, as the memory chip supply shortage is likely to persist through at least 2028.

"Industry demand has strengthened since our last earnings call, and we expect memory and storage supply-demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026," CEO Sanjay Mehrotra told analysts last month.

New memory chip production capacity could lead to oversupply by 2029

The major memory chip suppliers are working to address supply constraints by adding production capacity. Micron earlier this year broke ground in New York on a new facility that will include up to four fabrication plants, making it the largest semiconductor manufacturing site in the U.S. The company is also constructing other wafer fabrication plants domestically and abroad.

Micron is not alone. Samsung is building DRAM facilities. SK Hynix is constructing DRAM, HBM, and NAND flash facilities, and it’s building an advanced packaging site. Meanwhile, Sandisk and Kioxia earlier this year opened a NAND flash facility, and Kioxia plans to build another NAND facility.

Memory chips from those new manufacturing sites will hit the market at various points over the next three years, potentially leading to oversupply by 2029. Historically, memory chip prices have fallen sharply during periods where supply outpaced demand, leading to large decreases in suppliers' earnings.

The last major downturn in the memory chip industry occurred during the aftermath of the pandemic. DRAM and NAND prices peaked in early 2021, then declined approximately 70% by late 2023. Against that backdrop, Micron stock declined 50% from its high at one point in 2022.

Some investors think the current memory cycle will break the boom-and-bust mold

In the past, the memory chip industry has been highly cyclical, following a boom-and-bust pattern driven by fluctuations in supply and demand. Periods of strong demand would push prices higher, boosting suppliers' profits and incentivizing them to produce more chips. But they would invariably oversupply the market, causing prices and profits to fall.

Many investors see that pattern as a reason to be cautious in the current environment. But others think the AI revolution has changed the industry, potentially overcoming the traditional cycles by creating a powerful and durable source of demand. Indeed, Micron and other memory chip companies have signed longer contracts during the current cycle than in previous ones.

Also, conventional DRAM is a commodity because chips from different suppliers are largely interchangeable, meaning sellers compete heavily on price. However, HBM chips are more differentiated, so manufacturers compete on performance and power efficiency. As the AI boom unfolds and HBM becomes more important, memory chip suppliers could gain greater pricing power, potentially making the industry less susceptible to boom-and-bust cycles.

That puts investors in a difficult place. Micron stock looks quite cheap at 12 times earnings, especially because Wall Street estimates earnings will increase at 72% annually during the next three years. Then again, Micron traded at 6 times earnings at the low point of the last memory chip cycle. The stock would need to lose 50% of its value to reach that level today.
Personally, I think Micron is worth buying, but I would keep my position sizing small because a steep decline in the future is certainly plausible. It’s dangerous to assume the current memory chip cycle will play out any differently than the last one.

Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Broadcom, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.