AMD vs. Micron: Top AI Stock?

AMD vs. Micron: Which AI Stock is Better?

AMD and Micron have emerged as top contenders in the AI semiconductor market, both benefiting from the surging demand for AI chips. While both companies are experiencing significant growth, Micron's rapid expansion and lower valuation make it an attractive option for investors seeking both value and growth.

The AI chip market has seen unprecedented demand in recent years, driven by cloud service providers, hyperscalers, and governments investing in AI infrastructure. This trend has fueled the success of AMD and Micron, with their stocks rising 32% and 36% respectively over the past three months. However, Micron's faster growth rate and strategic focus on high-bandwidth memory (HBM) chips position it as a standout AI stock.

AMD's Growth in AI Chips

AMD designs chips for a wide range of applications, including PCs, servers, gaming consoles, and automotive systems. The AI boom has significantly boosted demand for AMD's CPUs and GPUs, particularly in data centers. In the first quarter of 2025, AMD reported a 36% year-over-year revenue increase to $7.4 billion, with data center and PC markets driving this growth.

AMD's data center revenue surged by 57%, while its PC business grew by 68%. The company estimates the AI accelerator chip market in data centers could reach $500 billion by 2028. AMD's data center chip sales doubled in 2024, and the company is developing new chips to further capitalize on this market. Additionally, AMD is gaining market share in the AI PC segment, which is projected to grow by 42% annually through 2028.

"AMD is well-positioned to benefit from the increasing use of AI chips," said an industry analyst. "Their strong financial performance and innovative chip designs make them a leading player in the AI semiconductor space."

Micron's Rapid Expansion

Micron Technology produces memory chips essential for AI accelerators, PCs, and smartphones. The demand for high-bandwidth memory (HBM) chips, which transmit large amounts of data quickly, has been particularly strong. Micron's HBM chips are already sold out for the year, leading the company to increase production capacity with capital expenditures rising to $14 billion.

The HBM market is expected to grow to $100 billion by 2030, up from $35 billion this year. Micron's memory chips are also used in AI-enabled PCs and smartphones, where the amount of memory is increasing to handle AI workloads. Micron's adjusted earnings tripled in the previous quarter, and analysts predict a 6x increase in earnings this fiscal year.

"Micron is growing faster than AMD due to tight memory supply and rising prices," noted a market expert. "Their focus on HBM production and strategic investments position them for significant growth in the AI chip market."

Valuation and Investment Outlook

While both AMD and Micron are thriving, Micron's faster growth rate and lower valuation make it a compelling choice for investors. Micron's stock is expected to maintain its growth due to AI-driven demand for HBM chips. However, AMD remains a strong contender with its robust earnings growth and innovative chip designs.

Investors seeking both value and growth may prefer Micron, but AMD's long-term potential should not be overlooked. Both companies are poised to benefit from the continued expansion of the AI semiconductor market.