Should Investors Consider Purchasing Controversial AI Shares at Present?
In the dynamic world of technology, two companies stand out as promising long-term investments in 2025: Micron Technology (MU) and Arm Holdings.
Micron Technology (MU) reported a stellar Q3 2025, with record revenue of $9.3 billion, a significant increase from previous quarters and last year. This growth was driven by robust demand for memory products, particularly high-bandwidth memory (HBM) for AI-related data centers. The company's net income and free cash flow also saw substantial increases, highlighting its solid profitability.
The company's growth is not limited to the third quarter. Micron is capitalizing on sustained demand in AI and data centers, ramping up production of advanced HBM3E and testing HBM4. This strategic move positions Micron as a key infrastructure supplier in the lucrative AI-memory market segment. Data center revenue doubled year-over-year, underscoring the growth potential.
Micron's long-term prospects are further bolstered by its plans for around $150 billion in U.S. investments in memory manufacturing and R&D. These investments include new fabs in Idaho and New York, which should strengthen Micron's technology leadership and capacity in the longer term.
MU stock has gained over 50% in 2025 so far, reflecting strong investor interest. While some recent price gains may be priced in, and a short-term correction could occur, the consensus from 9 out of 11 analysts is a “buy” rating. The company’s fundamentals and growth outlook suggest potential for further upside beyond any temporary volatility.
Micron is not the only player gaining momentum in its sector. In the SSD market, Micron has become the No. 2 player, and CEO Sanjay Mehrotra stated that the business is on track for record revenue and solid profitability in fiscal 2025.
Meanwhile, Arm Holdings, a leading designer of chips and collector of royalties, is trading at 88 times this year's earnings estimate. While this reflects its lucrative business, some analysts believe that Wall Street is underestimating the sustainability of Micron's growth. Arm expects up to 50% of new server chips to be Arm-based this year, with leading tech companies such as Nvidia, Amazon, Alphabet's Google, and Microsoft using Arm-based chips.
However, Arm's stock hasn't hit a new high since reaching $188.75 in July 2024, and it may need to settle for a while longer to bring its valuation closer to other leading chip stocks. Nvidia, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing are each growing earnings at about the same rate, or faster, than Arm but trade at much lower earnings multiples.
In summary, Micron Technology’s robust earnings growth, strategic investments, and strong positioning in the AI-driven memory market make it a compelling candidate for long-term investment in 2025 and beyond, despite short-term volatility and valuation concerns. Investors should be aware of potential near-term price fluctuations but can reasonably expect sustained growth based on current trends and company fundamentals. As for Arm, while it offers a promising growth-to-value profile, its current valuation may warrant a more cautious approach.
- With its impressive Q3 2025 earnings and strategic investments, Micron Technology provides a fruitful opportunity for long-term investment, especially in the stock-market sector related to technology and investing.
- Micron's solid growth in the AI and data center segments, coupled with its innovative advancements in HBM3E and HBM4 technology, positions it as a promising long-term investment in the lucrative memory market in 2025 and beyond.
- In contrast, Arm Holdings, while offering a growth-to-value profile, may require a more cautious approach due to its higher valuation compared to other leading chip stocks in the technology industry.
