What is driving the growth of artificial intelligence stocks
Artificial intelligence stocks have become a phenomenon that is hard to ignore in the global financial market. Over the past three years, the Global X Artificial Intelligence and Technology ETF, which serves as a barometer for companies involved in the development and application of AI, posted a cumulative gain of 118%. For comparison, the S&P 500, the main U.S. stock index and a benchmark for investors worldwide, rose 76% over the same period. This significant gap shows that the technology sector focused on artificial intelligence is not just keeping up with the market — it is running well ahead of it.
The appetite for companies building the infrastructure of artificial intelligence has been growing steadily, and the financial results these companies deliver help sustain that optimism quarter after quarter. Within this landscape, two companies stand out because they are trading below what many analysts consider their fair value: Nvidia and Micron Technology. Both hold strategic positions in the AI value chain and present fundamentals that warrant a closer look from anyone following the sector.
Nvidia: the undisputed leader in AI hardware
Nvidia did not reach the top by accident. The company invested heavily in research and development during years when the GPU market for artificial intelligence was still considered a niche. While competitors focused on other segments, the company led by Jensen Huang bet on accelerated computing as the future of technology. That long-term vision proved spot-on when the explosion of large language models brought AI to the center of both public and corporate conversations.
Suddenly, every major tech company needed high-performance GPUs to train and run their models, and Nvidia was — and still is — the dominant supplier. Its graphics processing units were used to train the most popular AI models in the world and are now also widely used for running inference workloads, which is the stage where already-trained models actually generate responses and results for end users.
With a price appreciation of a staggering 654% over three years and a commanding 81% share of the global AI chip market, the GPU maker has cemented its position as the centerpiece of the artificial intelligence revolution. This is not just about selling hardware. Nvidia has built a complete ecosystem that includes software, accelerated computing platforms, and strategic partnerships with virtually every major tech company on the planet. Beyond the chips themselves, the CUDA platform, which allows developers to program GPUs for AI tasks, has created a significant barrier to entry for competitors. Migrating away from CUDA to another solution would require rewriting millions of lines of code, making customer loyalty almost organic.
The numbers backing the investment thesis
The most interesting part is that even after all of this run-up in share price, many Wall Street analysts still believe Nvidia is trading below its fair value. The company can currently be purchased at just 22 times its estimated future earnings, a multiple that is practically in line with the S&P 500 itself. The big difference lies in the growth rate.
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In fiscal year 2026, ending January 25, 2026, Nvidia’s earnings surged 60%. And the outlook for fiscal year 2027 is even more encouraging: analysts project earnings growth of 73%. To put that in perspective, average earnings growth for S&P 500 companies this year is estimated at around 15%. In other words, Nvidia is expected to grow nearly five times faster than the average company in the main U.S. stock index, yet it is trading at the same multiple. It is as if the market were pricing the company as just another name in the index, completely ignoring the gap in growth velocity.
When a company consistently delivers results above expectations, its stock price tends to look cheap even after a major rally. It is like the pie is growing faster than the slices are being cut. This dynamic has kept Nvidia on the radar of investment funds, institutional managers, and retail investors looking for exposure to the artificial intelligence sector.
The future of data center investment favors Nvidia
Another factor that strengthens the long-term thesis is the outlook for data center infrastructure spending. Projections indicate these investments should grow at an annual rate of 40% through 2030, reaching somewhere between 3 trillion and 4 trillion dollars by the end of the decade. Every new data center built by hyperscalers like Microsoft, Google, Amazon, and Meta means more chip orders for Nvidia. And the trend shows no signs of slowing down, as the race for generative AI, autonomous agents, and ever-larger models keeps picking up speed.
The company’s product launch strategy also deserves attention. Nvidia operates on accelerated innovation cycles, with new chip architectures being introduced at increasingly shorter intervals. The transition from the Hopper architecture to Blackwell, for example, delivered significant gains in performance and energy efficiency — two critical factors for data center operators dealing with rising energy costs. This ability to constantly reinvent itself keeps the company ahead of the competition and reinforces investor confidence in its future potential.
Micron Technology: the other essential piece of the AI puzzle
If Nvidia is the brain of artificial intelligence, Micron Technology is the memory — literally. The company is one of the largest memory chip manufacturers in the world, producing DRAM and NAND components that are absolutely essential for the operation of AI servers, data centers, and high-performance computing devices. Without high-speed, high-capacity memory, Nvidia’s powerful GPUs cannot operate at their full potential. It is an interdependent relationship that places Micron in an extremely relevant strategic position within the artificial intelligence ecosystem.
The high-bandwidth memory market, known as HBM (High Bandwidth Memory), has become one of the fastest-growing segments in the semiconductor industry. This technology is used directly in AI accelerators, enabling chips to process massive volumes of data at the speed that artificial intelligence workloads demand. Micron has been investing aggressively to expand its HBM production capacity, positioning itself as a top-tier supplier for leading AI hardware manufacturers.
Why Micron could be undervalued
Just like Nvidia, Micron Technology also shows signs of trading below its true value. The company operates in a sector that has historically been cyclical, meaning it goes through phases of high and low demand that directly affect memory chip prices. However, the arrival of artificial intelligence as a structural demand driver has the potential to smooth out those cycles, creating a more stable and predictable consumption base for the company’s products.
Global investments in AI infrastructure are generating unprecedented demand for high-performance memory. Every server equipped with advanced GPUs requires a significant amount of memory to process the enormous volumes of data involved in training and running inference on artificial intelligence models. This dynamic directly benefits Micron, which is well positioned to capture a meaningful share of this expanding market.
For investors looking to diversify their exposure to the AI stock universe beyond GPU manufacturers, Micron represents a compelling alternative. The company is not just selling a commoditized component — it is supplying cutting-edge memory technology that is indispensable for the operation of the entire artificial intelligence value chain.
Risks worth watching
Despite all the optimism, it is important to stay grounded. The artificial intelligence stock market is dynamic and involves risks that cannot be ignored. Competition, for instance, is getting organized. Companies like AMD, Intel, and even specialized startups are working to capture a larger slice of the AI chip market. On top of that, major Nvidia customers like Google and Amazon are already developing their own custom processors for AI workloads, which could reduce these hyperscalers’ dependence on the company’s GPUs over the long run.
Geopolitical issues also factor into the equation, especially export restrictions on advanced chips to certain countries, which could impact international revenue for both Nvidia and Micron. For attentive investors, tracking these developments is just as important as watching quarterly earnings reports. Some key areas to keep an eye on include:
- Government regulation: new rules on semiconductor exports could limit access to important markets
- Growing competition: traditional rivals and new entrants are investing heavily to challenge the current dominance
- In-house chip development: major tech companies are building their own AI accelerators, which could reduce demand for third-party solutions
- Market cycles: the semiconductor sector has historically gone through periods of oversupply that squeeze margins and prices
The macro landscape still favors AI stocks
Even so, the consensus among a large portion of analysts is that both Nvidia and Micron Technology remain attractive ways to gain exposure to the growth of artificial intelligence. Past performance does not guarantee future returns, of course, but the fundamentals of both companies — growing revenue, strategic positions in the value chain, and addressable markets that are rapidly expanding — form a solid foundation.
The tech market has been through hype cycles before, like the dot-com bubble in the early 2000s, and it is natural for comparisons to come up. The difference, according to many experts, is that this time the rally is backed by real results and by a structural transformation in how businesses and governments use computing. Artificial intelligence is not a distant promise — it is already generating revenue, cutting costs, and creating new markets at an impressive pace.
New use cases pop up practically every week, from AI-assisted medical diagnostics to autonomous robots in factories and vehicles, and each one of them represents more demand for accelerated computing infrastructure and, consequently, more chips and more memory. This ongoing expansion of the addressable market is what supports the thesis that companies like Nvidia and Micron still have considerable room to grow.
What all of this means for those following the sector
For anyone keeping tabs on the tech sector and watching stocks tied to artificial intelligence, the current moment calls for extra attention but also recognition that we are witnessing a structural shift in the market. Nvidia has positioned itself as the backbone of this transformation, while Micron fills the equally critical role of supplying the memory that powers this entire computational revolution.
As long as demand for AI computing continues to grow — and every projection points in that direction at least through the end of the decade — these two companies are likely to remain at the center of conversations about opportunities in the artificial intelligence space. What makes it even more interesting is that the story of AI applied to the enterprise world is still in its early chapters. Every quarter, new applications and new business models emerge, further expanding the revenue potential for companies that supply the fundamental infrastructure behind this technology.
For investors thinking long-term, understanding this dynamic and closely monitoring the fundamentals of these companies can make all the difference when it comes to making decisions 🚀
