Can Micron Catch Up to Nvidia's $5.5 Trillion Market Cap?

Micron (NASDAQ: MU) caught many investors by surprise when it surged from a market cap of less than $100 billion at the start of 2025 to a more than $1 trillion behemoth this summer, but the memory-chip maker may have what it takes to become the world's most valuable company. To take that crown would require it to top Nvidia's (NASDAQ: NVDA) market cap, which is currently $5.5 trillion.

That wouldn't be easy, but it's not out of the question, either. Micron has surged by 673% over the past 12 months alone, while Nvidia has only increased by 37% over the same stretch.

Investors shouldn't expect Micron to keep delivering 673% returns each year, but there are reasons to believe that Micron will outperform Nvidia for some time and potentially become the world's most valuable company.

Image source: Getty Images.

Memory chips are just as important as GPUs

AI chips have held the spotlight on Wall Street for multiple years, but Micron and other memory players only started to gain real attention at the start of the year. Rumblings from tech leaders suggest that gaining access to enough memory hardware is now their top priority.

Elon Musk said that the global shortage of memory is "the limiting factor" to the AI build-out, and Amazon (NASDAQ: AMZN) specifically cited rising memory costs when raising its capital expenditure projections for this year.

Memory chips also happen to be critical components for GPUs. Every Nvidia processor includes multiple memory chips from companies like Micron. Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO) also need memory chips for their AI accelerators.

However, it's not just AI parallel processors that require memory components. So do CPUs and solid-state drives, which are just as critical for AI infrastructure. Nvidia's GPUs are essential components for AI data centers, but Micron and its peers provide multiple foundational components for those vast server clusters. And with AI software demanding quick access to ever-larger volumes of data, Micron and other memory-chip makers have more opportunities than Nvidia to expand their products' footprints within data centers.

Micron is growing faster than Nvidia

In the market cap race, Micron can only gain ground on Nvidia if its fundamentals grow faster than Nvidia's. It turns out that's what's happening.

Nvidia was no slouch in its fiscal 2027 second quarter -- it delivered 106% year-over-year revenue growth. That was a substantial increase. But it looks far less impressive next to Micron, which crushed guidance and delivered a 346% year-over-year top-line gain to $41.9 billion in its fiscal 2026 third-quarter. Both companies have net profit margins above 60%, but Micron's edged ahead of Nvidia's in their most recent quarters.

Recent acceleration has also favored Micron. While Nvidia has posted a respectable 18% sequential growth rate, Micron's revenue surged by more than 70% sequentially.

Nvidia still generates more revenue and profits per quarter than Micron, but the gap isn't that big when considering their growth rates. Nvidia's Q2 fiscal 2027 revenue and net income were $96.2 billion and $59.7 billion, respectively. In Micron's fiscal 2026 third quarter, its revenue and net income were $41.5 billion and $28.2 billion, respectively.

Micron may be one year away from reporting nearly the same revenue and net income as Nvidia just reported. The math supports that conclusion if Micron can double its revenue and profits year over year in fiscal 2027 -- and that's assuming that Micron doesn't quadruple its sales as it did in its most recent quarter.

Micron trades at a lower valuation

There's been a lot of talk in the investing world about how Micron and Nvidia both have attractive valuations, especially if you compare them to the average valuations for tech stocks or the broad-market S&P 500. However, a head-to-head comparison isn't even close.

Micron trades at a forward P/E ratio of 6 compared to Nvidia's 25. Micron's shares would have to roughly quadruple for the company to match Nvidia's forward P/E ratio. A similar gap exists between these two companies' price/earnings-to-growth (PEG) ratios. Micron's 0.14 PEG ratio is much lower than Nvidia's 0.58 PEG ratio. In general, any positive PEG ratio of less than 1 is viewed as signaling that the stock in question is undervalued. So Nvidia is still a bargain by that standard, but Micron is even more so.

Both forward P/E and the PEG ratio factor a company's expected future growth into the valuation calculation. When pricing in their upcoming opportunities, Micron looks like a better bargain, which could support the stock's continued outperformance over Nvidia. If these trends continue, Micron may be able to overtake Nvidia's market cap by the end of the decade.

Marc Guberti has positions in Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Broadcom, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.