Alphabet vs. Micron Technology: Which Is the Best AI Play Right Now?

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Micron Technology (NASDAQ: MU) have both rocketed to the top of investors' attention, benefiting from their leads in their respective artificial intelligence (AI) markets.

Alphabet stock has surged by more than 150% over the past year as the company's cloud sales rose and its Google Gemini AI model continued to gain traction. Meanwhile, Micron stock rocketed by more than 800% as the AI infrastructure build-out drove demand for its memory chips to levels well beyond what it could supply.

I think both companies deserve spots in your portfolio, but which one has the greater potential to benefit from AI in the coming years?

Image source: Getty Images.

The case for Micron Technology's memory play

AI investors may not need an introduction to Micron, but to the uninitiated, Micron may be a slightly obscure tech stock. The company designs memory processors that are found in everything from the storage drives you buy to your smartphone and computer to the servers in artificial intelligence data centers.

Many big tech companies (including Alphabet) are in the midst of AI spending sprees right now, competing for the most capable AI models and the computing capacity to keep their AI software running. This year alone, five tech giants plan to invest a total of about $750 billion in AI infrastructure. And they aren't the only ones building data centers now.

As these companies do that, they're buying up all the memory chips that Micron and its peers can produce, resulting in pricing power and big wins for Micron. In its fiscal 2026 second quarter, which ended Feb. 26, the company's revenues surged 196% higher to nearly $24 billion, and its diluted non-GAAP (generally accepted accounting principles) earnings spiked 682% to $12.20 per share.

The company is also bullish on emerging technologies, such as humanoid robotics, that could further boost demand for its memory chips. What's more, Micron's management believes that as PC and smartphone makers become more focused on delivering devices that can handle agentic AI, they'll need to add more memory to them to support those capabilities.

The downside for Micron is that the memory business has historically been cyclical. When demand exceeds supply and prices rise, memory makers start building new fabrication facilities -- a process that takes years. Eventually, though, that has always resulted in an oversupply that tanks memory prices. The company has experienced several of these boom-and-bust cycles in the past, and the cycle triggered by the AI infrastructure build-out could follow a similar pattern.

That doesn't mean Micron stock isn't worth owning; it just means that limited supply, combined with the high demand driven by a massive uptick in data center construction, has created a perfect business environment for the company. While no one knows how long it will last, the short answer is "not forever."

How Alphabet's AI bets are paying off

What I like about Alphabet's AI angle is that it's not just one play. The company is leaning into multiple AI bets right now, and the latest data shows they're mostly paying off in big ways.

First, consider that it owns one of the top AI models available right now: Google Gemini. While not as popular as ChatGPT or Anthropic's Claude, Gemini still has 750 million monthly active users, and that user base is growing.

Gemini isn't just a pet project for Alphabet; it's a central part of how the company intends to compete in the next tech era. That's why the company has infused it into everything from its Google Workspace apps to Android OS and other online services.

It's also gaining traction outside of the Google ecosystem. Apple is preparing to launch the next iteration of its Siri digital assistant, which will reportedly use Gemini as its foundational AI model. For that access, Apple will pay Alphabet an estimated $1 billion annually.

Another area of AI growth for the company is coming from its cloud services. Google Cloud revenue jumped 63% year over year in Q1 to more than $20 billion, and the company's management said on the earnings call that enterprise AI services were the main reason for that growth. What's more, the number of Gemini Enterprise monthly active users rose 40% from the year-ago quarter.

To keep ahead of its AI rivals, Alphabet plans to invest up to $185 billion in capital expenditures this year, mostly in data centers. The company has developed its own Tensor Processing Units (TPUs) to handle AI workloads, which means Alphabet has exposure to every facet of AI, from chips to models and software to data centers.

Alphabet's multipronged approach to the AI megatrend could help the company sustain its growth for many more years. While Micron is benefiting from a temporary imbalance between supply and demand (which could still last for years), Alphabet has built AI businesses that will propel it well into the AI era.

Micron is still a great AI play, but if I had to pick the best AI stock right now (and down the line), I'd put my money on Alphabet.

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Apple, and Micron Technology. The Motley Fool has a disclosure policy.