3 Growth Stocks That Can Outperform Micron in 2027
Key Points
Penguin Solutions' CXL memory products solve a critical problem and may become necessary for most AI racks.
Sandisk's memory products are growing at a faster rate than Micron's.
Fortinet's cybersecurity platform is gaining demand as agentic AI creates more vulnerability points.
- Motley Fool Issues Rare "Total Conviction" Buy Alert ›
Micron (NASDAQ: MU) has dazzled investors by more than tripling this year, but picking next year's winners may require shifting away from current leaders. The memory chip maker has already become a centerpiece of the artificial intelligence (AI) boom, but smaller companies may present a higher potential upside.
If you missed the boat with Micron this year, these three stocks are worth following.
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Penguin Solutions
Penguin Solutions (NASDAQ: PENG) specializes in memory products. While the company hasn't gained as much ground as Micron, Penguin Solutions is making meaningful progress.
The company's CXL memory products are essentially memory banks that any AI chips in the server can access. That way, if an AI chip runs out of memory, it can tap into this pool of memory instead of slowing down the entire system. Penguin Solutions' CXL products are each deployed to a single rack, which leads to higher revenue as AI data centers scale up their racks.
Racks inside AI data centers each contains eight to 72 graphics processing units (GPUs), although eight to 32 GPUs is the norm. It's a major long-term opportunity as companies continue to accumulate chips, and that growth already shows up in Penguin Solutions' financial results.
Penguin Solutions reported 68% year-over-year net sales growth in its fiscal 2026 fourth quarter (ended Aug. 28), highlighted by 158% year-over-year growth in its integrated memory segment. That's the main driver for Penguin Solutions' share gain of more than 190% this year, and as it makes up a larger percentage of total revenue, Penguin Solutions should see its overall numbers surge.
Sandisk
Sandisk (NASDAQ: SNDK) is another key part of the memory sector. It specializes in NAND flash memory products and is growing at a faster rate than Micron. Not only is Sandisk outgrowing the large memory chip maker, but it also has a lower market cap and a compelling valuation.
Sandisk trades at a forward price-to-earnings (P/E) ratio of less than 6, and its financial performance is supported by multiyear strategic partnerships with key customers. Those long-term deals have eased worries about the cyclical nature of memory chips. Even though boom-and-bust cycles have been the norm, the AI infrastructure build-out is still in its early stages, much to the benefit of Sandisk.
Even with the recent downward pressure on AI stocks, Sandisk is up by more than 450% this year. If its revenue and net income growth rates continue to outpace Micron's, the company has a real shot at continuing its outperformance of the bigger chipmaker. Sandisk's $14 billion in additional authorized stock buybacks in its fiscal 2026 fourth quarter serves as the cherry on top.
Fortinet
Fortinet (NASDAQ: FTNT) is a cybersecurity stock that is benefiting from AI. As more businesses use AI agents and other products, they increase the number of vulnerabilities within their systems.
That's one of the trade-offs with using AI, especially as hackers use this technology to infiltrate databases. However, enterprises are simply investing in safeguards instead of giving up on the most innovative technology of our era.
Fortinet shares have gained about 70% this year as its cybersecurity platform gains more traction. It also trades at a lower valuation than most of its cybersecurity peers, with its 65 P/E ratio. That's still an elevated valuation compared to most tech stocks, but it's trading at a more affordable level than the majority of cybersecurity companies.
Fortinet anticipates a $172 billion total addressable market for the AI security industry. While it's not the only player in the business, Fortinet has established itself as a cybersecurity leader, positioning it to gain a large portion of total market share. Fortinet also incorporates annual recurring revenue in its business, which makes it easier for the company to scale over time.
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Marc Guberti has positions in Penguin Solutions. The Motley Fool has positions in and recommends Fortinet, Micron Technology, and Penguin Solutions. The Motley Fool has a disclosure policy.
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