The rising demand for memory and Data Center infrastructure amid the artificial intelligence (AI) boom benefited both Micron Technology MU and NVIDIA Corporation NVDA. Here is a look at how the two stocks compare after their latest earnings reports and which one presents a more compelling buying opportunity.
Strong HBM Demand Drives Micron’s Growth and Outlook
According to Micron’s June 24 press release, the company’s revenues for the fiscal third quarter of 2026 came in at $41.46 billion, significantly higher than $23.86 billion in the previous quarter and $9.3 billion recorded a year earlier.
The company’s top-line growth was driven by robust demand for Micron’s cutting-edge high-bandwidth memory (HBM) chips. Demand for HBM, which is widely used in AI servers, remains strong due to its capability to competently manage complex AI workloads while offering improved power efficiency.
Looking ahead, Micron expects revenues to rise to around $50 billion in the fiscal fourth quarter of 2026. The company also projects a healthy gross margin of approximately 86%, supported by strong demand for AI-related memory products and favorable pricing.
Data Center Growth Drives NVDA’s Revenues and Profitability
NVIDIA’s Data Center segment remained its key growth driver, with revenues surging 117% year over year to $89 billion in the fiscal second quarter of 2027, according to the company’s Aug. 26 press release. Total revenues reached an exceptional $96 billion, representing a 106% year-over-year and 18% sequential jump.
Along with revenue growth, the company’s profitability has also strengthened. NVIDIA’s gross margin rose to 75% from 72.4% a year ago, while both GAAP and non-GAAP net income increased. NVIDIA’s GAAP operating income has more than doubled year over year, implying significant operating leverage.
Looking ahead, NVIDIA projects $108 billion, plus or minus 2%, in revenues for the fiscal third quarter of 2027, signaling continued sequential growth. Profitability is also expected to remain robust, and with the Vera Rubin platform entering full production, NVIDIA is well-poised to benefit from the next phase of demand for AI infrastructure.
Micron or NVIDIA: Which AI Stock Is a Better Buy Now?
Driven by strong HBM demand, Micron delivered strong revenue growth and profitability, while robust Data Center growth has boosted NVIDIA’s revenues and profitability. However, unlike Micron’s growth, which is much more concentrated in the memory cycle, NVIDIA’s broader AI infrastructure exposure gives the Jensen Huang-led company a stronger growth outlook and greater earnings visibility.
Additionally, NVIDIA’s 63.7% net profit margin, compared with Micron’s 55.9%, indicates greater efficiency in converting revenues into bottom-line profits.
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Moreover, NVIDIA appears more efficient than Micron at generating profits from shareholders’ equity. This is because NVIDIA’s return on equity (ROE) of 96% exceeds Micron’s ROE of 72.5%.
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Overall, NVIDIA’s broader AI exposure, stronger margins, and higher ROE make it a more compelling investment opportunity now than Micron. New investors may consider waiting for Micron’s upcoming earnings release on Sept. 30, after the market close, to assess growth and opportunity before making an informed investment decision.
NVIDIA currently has a Zacks Rank #1 (Strong Buy), while Micron has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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