Many tech stocks are soaring sky-high in early 2025. The unreal intelligence (AI) boom that began about two years ago goes strong. The economy has fared higher recently, giving fast-growing corporations higher access to low-cost financing. And plenty of of last 12 months’s top performers are getting back from a pointy price drop in 2022, when the inflation crisis was in full swing and the ChatGPT revolution hadn’t began.
But some tech stocks never got the memo about soaring in 2024. They only continued to enhance their business prospects with or without investor support. Because of this, I see a couple of incredible values within the tech sector without delay. Particularly, you must consider grabbing a couple of shares of Micron Technology(NASDAQ: MU) and Roku(NASDAQ: ROKU) nowadays.
Memory chip maker Micron plays a really energetic part within the AI craze.
The machines that train and operate large language models (LLMs) like ChatGPT need high-powered processors from corporations like Nvidia(NASDAQ: NVDA) or Advanced Micro Devices(NASDAQ: AMD), but that is not the entire story. The identical systems require massive amounts of high-speed RAM and long-term storage NAND memory. The AI accelerators from Nvidia and AMD also hold large amounts of each memory types. And if you buy a contemporary smartphone with built-in AI functions, that device also needs far more memory than the previous generation.
I could name many more drivers of giant demand for memory chips, however the AI trend is at the highest of the list. The brand new class of high-bandwidth memory (HBM) represented a complete addressable market (TAM) of $16 billion last 12 months. That revenue opportunity is anticipated to quadruple over the following three years, growing even further to $100 billion in 2030.
“This HBM growth shall be transformational for Micron, and we’re enthusiastic about our industry leadership on this vital product category,” Micron CEO Sanjay Mehrotra said in last month’s first-quarter earnings call. “We expect to be a number one supplier of HBM with essentially the most robust, trusted, and industry-leading technology roadmap and execution record.”
Indeed, Nvidia’s latest and best AI accelerators are shipping with many gigabytes of Micron’s HBM3E memory. The corporate will soon ramp up production of a next-generation HBM4 product line, offering 50% higher performance and significantly lower electric power consumption than the previous generation.
Chart showing Micron stock’s annual price gains and losses over time.
Data collected from Google Finance on Jan. 24, 2025. Chart by creator.
So, Micron is positioned for incredible business growth over the following few years. That is an upswing in a really cyclical industry, where the highest three chip suppliers (including Micron) keep adjusting to very different end-user demand from 12 months to 12 months.
Micron’s stock enjoyed a big jump in 2023, but that was only a bounce off the underside of a harsh low point for semiconductors typically. The 2022 inflation crisis was concurrent with a worldwide shortage of chipmaking facilities and materials, reminiscent of negative effects of the COVID-19 pandemic. Last 12 months’s chart must have continued Micron’s positive trend, however the stock ended 2024 almost exactly where it began.
The cyclical rebound will proceed this 12 months, boosted by fresh chip demand from the AI market and other consumer-facing trends. Micron expects its slim profit margins to widen, cutting the stock’s price-to-earnings (P/E) ratio from 30 times trailing earnings to 9 times next-year estimates.
That is a bargain in my eyes.
Media-streaming technology developer Roku may not look low cost at first glance. The corporate has not been profitable lately, with negative operating income and modest revenue growth over the past 4 quarters. So, the profit-based valuation metrics don’t apply, and analysts don’t even anticipate positive earnings in 2025. I mean, even essentially the most bullish analyst firm writes that concentrate on in red ink.
Roku’s stock chart is smart in the event you stop your Roku evaluation right there. The shares are down 11% over the past 12 months and are changing hands on the bargain-basement valuation of three.0 times trailing sales.
But that is removed from the entire story.
I’m talking a couple of firmly established leader within the North American marketplace for media-streaming hardware and software platforms. Without Roku’s user-friendly interface, streaming media services from the likes of Netflix(NASDAQ: NFLX), Walt Disney, and Warner Bros Discovery can be limited to web sites and smartphone apps. Those big, beautiful lounge screens would not be a alternative for going to the movie show anymore. I mean, there are other names on this race, but Roku’s polished user experience holds a very dominant market share.
The following step is to expand this North American dominion worldwide. Roku is off to a terrific start in Latin America and making headway in a couple of European countries. However it’s still early, and Roku doesn’t even include international sales in its quarterly business reports yet. At the identical time, Netflix collects 56% of its quarterly revenues from overseas markets — the worldwide market is already significant.
Chart showing Roku stock’s annual gains and losses over time.
Data collected from Google Finance on Jan. 24, 2025. Chart by creator.
At the identical time, the inflation crisis began a deep downturn within the digital promoting sector. Why spend big money on effective but expensive marketing campaigns when people aren’t able to buy groceries? I am unable to wait to see Roku having fun with the upside of that situation as shoppers return to normal spending patterns and advertisers wish to buy ad space again.
Similar to Micron, Roku looks dramatically undervalued in January 2025.
Ever feel such as you missed the boat in buying essentially the most successful stocks? You then’ll wish to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock suggestion for corporations that they think are about to pop. Should you’re frightened you’ve already missed your likelihood to speculate, now’s the most effective time to purchase before it’s too late. And the numbers speak for themselves:
Nvidia:in the event you invested $1,000 after we doubled down in 2009,you’d have $369,816!*
Apple: in the event you invested $1,000 after we doubled down in 2008, you’d have $42,191!*
Netflix: in the event you invested $1,000 after we doubled down in 2004, you’d have $527,206!*
Straight away, we’re issuing “Double Down” alerts for 3 incredible corporations, and there is probably not one other likelihood like this anytime soon.
Anders Bylund has positions in Micron Technology, Netflix, Nvidia, Roku, and Walt Disney. The Motley Idiot has positions in and recommends Advanced Micro Devices, Netflix, Nvidia, Roku, Walt Disney, and Warner Bros. Discovery. The Motley Idiot has a disclosure policy.
