Prediction: 2 Under $1 Trillion Stocks That Will Be Worth More Than Micron 5 Years From Now
Key Points
As the HBM leader, SK Hynix stock should grow to be larger than Micron in the next five years.
AMD has some of the best opportunities in the AI infrastructure space, which should propel it past Micron over the next five years.
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Micron (NASDAQ: MU) is one of the most popular stocks in the market today, given its surging growth and cheap valuation. The stock currently has a market cap of just over $1 trillion, but I think there are two under-$1 trillion market-cap companies in the semiconductor space that are likely to surpass it in value in the next five years.
The first of these semiconductor stocks is SK Hynix (NASDAQ: SKHY), while the second is Advanced Micro Devices (NASDAQ: AMD).
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SK Hynix: The better memory play
SK Hynix and Micron compete directly in the memory market. They are two of the big three DRAM makers, along with Korean conglomerate Samsung.
Micron has arguably been outperforming SK Hynix, delivering better revenue and profit growth. However, the reason behind this is why I think SK Hynix will outperform Micron over the next five years and become the larger market cap company.
The memory market is largely being driven by demand for a specialized form of DRAM (dynamic random access memory) called high bandwidth memory (HBM), which gets packaged with graphics processing units (GPUs) and other AI chips to reduce latency and optimize performance. Demand is through the roof, with SK Hynix recently saying HBM demand was currently more than double the supply. With the big three DRAM makers dedicating much of their resources toward HBM, conventional DRAM prices have actually been rising at a quicker pace than HBM.
This dynamic has benefited Micron, which derives the least memory revenue from HBM among the group, with an HBM market share under 20%. SK Hynix, on the other hand, is the HBM leader, with about 50% market share, and it has a $500 billion long-term contract agreement with Nvidia.
Over the next five years, SK Hynix should be the company that outperforms, given that it is the technology leader in the space. Both companies currently have similar gross margins, but SK Hynix is generating more revenue and has more net cash on its balance sheet, so there is no reason it should have a lower market cap than Micron right now. As such, I expect SK Hynix's stock to outperform over the next five years.
Image source: Getty Images.
AMD: Multiple drivers
While AMD stock is not anywhere near as cheap as SK Hynix and Micron, the company has some of the best opportunities in the AI infrastructure space. The company is riding two of the biggest trends in AI: inference and agentic AI.
AMD has positioned its GPUs for the inference market. Its GPUs use a chiplet design, which allows them to be packaged with more memory, which is ideal for inference. At the same time, the company is a leader in server central processing units (CPUs), which are seeing huge demand come from the rise of agentic AI.
The company is also now packing its GPUs and CPUs with its Helios open rack-scale platform. Each system contains 72 GPUs and 18 CPUs per rack and costs between $5 million and $5.5 million, and consumes between 225 kilowatts and 245 kilowatts of power. The company has gotten some strong early commitments from OpenAI, Meta Platforms, Anthropic, Microsoft, and Oracle.
Its two largest deals are 6-gigawatt commitments from OpenAI and Meta Platforms, which, based on the math above, would be over $120 billion each. Anthropic's 2-gigawatt deal, meanwhile, would be worth over $40 billion. Meta Platforms has also reportedly expanded its partnership with AMD, and is using its CPUs to help power its AI agents. Those three customers alone are likely to generate close to $300 billion in revenue over the next few years.
Also not to be overlooked is that AMD is reportedly working with Alphabet to develop its 10th-generation Tensor Processing Unit (TPU) that will integrate on-package CPU cores. This could be a new agentic AI chip, and it opens up another large revenue stream. The company's recent acquisition of World Labs also puts robotics and physical AI in its crosshairs.
AMD has huge and exciting market opportunities in front of it that could fundamentally alter its financial profile in the next five years. As such, I expect the stock to outperform Micron over this stretch.
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Geoffrey Seiler has positions in Advanced Micro Devices, Alphabet, and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
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