Key Points
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AI data center infrastructure spending is forecast to more than double to $2 trillion by 2028.
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SK Hynix and Micron have a combined 49% of the global DRAM memory market.
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Both companies are growing sales and earnings rapidly, and their shares look like bargains right now.
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There’s nothing wrong with buying shares of the most dominant tech companies as a solid starting point for investing in the AI boom. After all, Amazon, Microsoft, and Alphabet are the world’s three leading cloud computing infrastructure companies, with impressive AI-driven sales growth, and fellow hyperscaler Meta Platforms recently launched Muse, the most popular agentic AI app right now.
Add to the mix Tesla‘s potential to merge with Space Exploration Technologies, Apple‘s expanding product lineup, and the constant demand for Nvidia‘s processors to build AI infrastructure, and it’s easy to see why the “Magnificent Seven” stocks are top of mind for tech investors.
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But it would be a mistake to overlook the great tech companies that aren’t such household names. In particular, memory makers SK Hynix (NASDAQ: SKHY) and Micron Technology (NASDAQ: MU), whose share prices are down about 20% over the past month, have a lot to offer to investors who are willing to stray a little bit off the well-worn path.
Here’s why they could be long-term winners for those who pick them up now.
SK Hynix just demonstrated that AI spending isn’t slowing down
Given how SK Hynix’s share price plunged over the past month, you’d think that the company must’ve delivered bad news to investors. Instead, the exact opposite is true. Here are just some of the highlights from the blockbuster third-quarter report it delivered on Oct. 28:
- Total revenue jumped 328% to $78.9 billion.
- Operating profit rose 632% to $62.3 billion.
- Long-term agreements were secured for more than half of the company’s 2027-2028 memory production capacity.
In short, sales and earnings are accelerating, and demand for its memory chips is sky-high. Management really got the point across when it said in the press release that it “expects the structure in which demand exceeds supply to persist through 2030.”
SK Hynix is well positioned to know where the memory market is headed, as it is the second-largest player in the global DRAM market with 25% market share. Management believes a “virtuous cycle has taken hold” in which AI productivity leads to greater use of AI, spurring more AI infrastructure investments.
Micron’s impressive third-quarter was too easily forgotten
Micron’s shares haven’t fared much better than SK Hynix’s over the past month, which is a bit surprising given the impressive growth it achieved in its fiscal 2026 fourth quarter, which ended Sept. 3. Here’s how the company did:
- Total revenue rose 380% year over year to $54.2 billion.
- Non-GAAP (generally accepted accounting principles) earnings were up by about 1,000% to $33.42 per share
- Memory demand continued to outpace supply, and management said “we expect an even stronger” fiscal 2027.
Even more impressive is that Micron’s leadership issued fiscal 2027 Q1 sales guidance of $61.5 billion at the midpoint, representing a 352% jump from the same period last year.
Like SK Hynix, Micron continues to benefit from rising demand for memory chips and holds 24% of the DRAM market, just behind its rival.
Both memory stocks look like a bargain right now
I know there are serious concerns about the AI trade right now, and I think investors are right to be skeptical about some tech companies’ high spending as they try to stay ahead of each other in the AI race.
But there are no signs that spending is slowing down. And, at least for some leading tech companies, the rise in infrastructure spending is already generating big increases in sales, as it has for Alphabet’s Google Cloud and Microsoft’s Azure. The latest estimates from Bank of America forecast that data center spending will more than double to $2.1 trillion by 2028.
If all of that weren’t enough to convince you that SK Hynix and Micron could be worth buying, consider that both stocks look like bargains right now. SK Hynix’s price-to-earnings (P/E) ratio is 11 and Micron’s P/E ratio is just 13 — far below the tech sector’s average P/E ratio of 24.
All of this means you can get good deals on these leading AI stocks right now, even as they tap further into the expanding memory market over the coming years.
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Bank of America is an advertising partner of Motley Fool Money. Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
