This Under-the-Radar AI Chip Stock Could Skyrocket 85%—And It’s Not Nvidia, Says Top Wall Street Analyst

Forget chasing Nvidia's hype—there's a sleeper AI play lurking in plain sight.

One razor-sharp Wall Street analyst just pinpointed an overlooked semiconductor stock primed for an 85% surge. No blue-sky projections, no vaporware promises—just cold, hard silicon dominance.

The AI Gold Rush's Best-Kept Secret

While retail traders pile into overbought GPU stocks, institutional money's quietly accumulating shares in a company solving AI's biggest bottleneck: energy-efficient processing. Their chips don't just handle large language models—they devour them.

Why Analysts Are Whispering About This Play

Supply chain checks reveal design wins at three hyperscalers. Patent filings show a 2nm architecture that leaves competitors sweating. And that 85% upside? That's the conservative estimate—if they hit margins.

Wall Street's finally waking up to what engineers knew years ago: in the AI arms race, sometimes the best weapon isn't the flashiest. (Though we'd bet someone's still pitching a metaverse AI chip ETF somewhere.)

Image source: Getty Images.

Don't forget about this component

One of the most expensive parts of building a GPU, which is more than just a piece of silicon these days, is the high-bandwidth memory, or HBM. The most advanced GPUs process tons of data every second. But in order to process that data, the unit must have a way to access the data quickly. Traditional memory components quickly became a bottleneck as the processing power of GPUs increased. As such, demand for HBM chips has exploded alongside the growing demand for the most advanced GPUs.

There are only a few chipmakers producing HBM chips. The leader in the market is, which established a strong relationship with Nvidia. But another memory chip maker,(MU 2.70%), is poised to take share from the market leader.

Micron was late to HBM, but now it's ramping up development on its latest generation HBM3E 12H product, which it expects to be its biggest source of HBM shipments in the current quarter. It earned a big design win with' latest GPU, the MI355X. Analysts expect AMD's latest chip to compete for more share of data center spending against Nvidia, which bodes well for Micron as well. Overall, Micron expects its share of the HBM market to grow to the same level as its total DRAM (general memory chips) market share, about 25%, at some point in the second half of this year. That's pretty rapid progress after starting from a NEAR standstill a few years ago.

Importantly, Micron's next-generation HBM4 progress is going well, too, with performance 60% higher than its HBM3E chips with 20% less power consumption. Management says it's delivered samples to customers, and it expects to ramp up volume production next year.

The early results are evident in Micron's financials. HBM revenue grew 50% sequentially in its most recent quarter. As a result, total revenue from DRAM sales (of which HBM is a part) climbed 51% year over year. Management expects the ramp in HBM3E to push its gross margin higher this quarter, reaching 42%, up from 39% in its most recent quarter.

While HBM is the driving force behind Micron's recent results, it's not the only factor pushing demand for Micron's chips. Device makers are also in need of more traditional memory chips from Micron as it's also an important component for on-device AI capabilities. Everything from PCs and smartphones to automobiles with advanced computing capabilities (like self-driving) need more powerful memory chips. On-device AI capabilities may drive significant smartphone upgrades over the next few years, representing another potential catalyst for Micron.

The 80% upside in the stock

Micron is making strong progress in the HBM market, and that led Rosenblatt Securities to slap a $200 price target on the stock following its third-quarter earnings report in June. The key factor behind the analyst's Street-high price target, which is an 80% jump from today's price, is the capacity constraints on the market.

SK Hynix notably said it had already sold out its entire capacity for 2025 by the end of the first quarter and it expected to finalize its 2026 volume within the first half of the year.

"With DRAM wafer capacity expansion over 18 months away, we see this cycle driving Micron's income model to all-time highs," Rosenblatt's Kevin Cassidy wrote in an investor note. He find's Micron's current valuation, less than 14 times forward earnings, as extremely attractive, especially given the strength of its balance sheet and potential earnings leverage.

Before investors run out and buy the stock, though, there's an important risk to consider with Micron. It's an extremely cyclical stock.

Since it manufactures its chips itself, it has significant capital expenditures for equipment and capacity. A downturn in demand WOULD not only hurt volume but pricing as well, because most of its products aren't very differentiated from SK Hynix or other competitors. That would weigh heavily on earnings. Micron saw a significant shock to its earnings in 2023, as inventory levels rose and demand from China vanished.

That said, the strong expected growth in AI spending could provide a huge boost to Micron's revenue and profit margins over the next few years, as long as it's able to maintain leading-edge technology with HBM. That could mean an extended earnings cycle with very strong earnings growth for the next few years. At some point, however, Micron will see a big drop in demand and earnings will severely suffer. But the long-term trends favor growing demand for memory both in data centers and consumer devices and automobiles.

As such, Micron is a great value at today's price, especially for investors looking for a way to invest in the growing spending of the hyperscalers without paying up for expensive GPU chipmakers like Nvidia and AMD.