Key Points
Marvell and Micron make key components for AI training and inference chips and servers.
Marvell may be picking up a new customer for its custom AI accelerators (or XPUs).
Micron's memory chip pricing is set to keep soaring through 2027.
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Semiconductor stocks have been on a tear in 2026, as massive capital spending plans from hyperscalers fuel growth across the industry. Two of the top performers so far this year are Marvell Technology (NASDAQ: MRVL) and Micron Technology (NASDAQ: MU). The two chipmakers' stocks are up 93% and 74%, respectively, in 2026 as of this writing.
Investors looking at the semiconductor space may be weighing these two high-flying stocks against each other. Despite the massive run-up in both stocks' prices, one stands out as a better buy right now.
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The custom AI chipmaker
Marvell makes optical networking chips and custom AI accelerators, commonly known as XPUs. It designs Microsoft's Maia chips and previously designed Amazon's Trainium chips. It also works closely with the other hyperscalers, Alphabet and Meta Platforms, for networking chips. Nvidia recently invested $2 billion in Marvell, ensuring its chips are compatible with its NVLink Fusion infrastructure for high-speed interconnect.
Marvell's networking chips have attracted significant attention in recent months as the need for high-speed data transfers between GPUs and AI accelerators has grown. Management expects its acquisition of Celestial AI, which specializes in optical interconnect for AI systems, to reach a $500 million annualized revenue run rate by 2028 and $1 billion by 2029.
But investors may still be underappreciating the XPU business. Microsoft has indicated it plans to use more of its next-generation Maia chips for its internal AI training and inference. That could result in a significant increase in Marvell's order volume in fiscal 2028. Additionally, The Information recently reported that Marvell is in talks with Google to develop a custom AI accelerator as an alternative to its Tensor Processing Units (TPUs), developed by Broadcom. The talks also included a memory processor designed to work alongside Google's TPUs.
The investment from Nvidia is a further indication that the XPU business has legs, and Nvidia is looking to protect its GPU business against the competition. As such, it's no surprise that analysts expect earnings per share to climb from $3.83 this year to $7.50 two years from now. Marvell should be able to produce consistent share gains of data center server racks for years to come as it improves its networking chip capabilities and wins more sockets for its XPUs.
At a share price of $164, the stock trades for 42.5 times forward earnings, but that drops to 21.7 times earnings two years out.
The memory chipmaker
Micron is one of three major memory chipmakers benefiting from a massive supply shortage. One of the biggest bottlenecks in AI training and inference is memory, and high-bandwidth memory (HBM) chips packaged with GPUs and XPUs have seen increased demand as a result. But memory chipmakers, including Micron, have been slow to expand production capacity, as they don't want to oversupply the market. In the meantime, prices for memory chips have soared, as the market awaits additional capacity.
Capacity is coming. Micron plans to invest $25 billion in capital expenditures this year and at least $35 billion in 2027 to help meet the demand. Rival memory chipmakers SK Hynix and Samsung Electronics are also spending heavily. Still, new fabs take years to ramp up production, so the supply shortage will likely last through 2027.
With higher chip prices, Micron has seen its profits soar. Pricing for its DRAM chips, the building blocks for HBM, climbed about 66% sequentially last quarter. Combined with a small increase in unit shipments, DRAM revenue climbed 74% sequentially and 207% year over year. The smaller NAND segment saw prices climb even faster, leading to 82% sequential growth. Gross margin was through the roof, climbing 18 percentage points to 75%.
Micron's set to see its earnings continue climbing over the next two years as pricing remains high and it's able to produce more units. However, the memory chip business is extremely cyclical. And the production capacity the entire industry's developing to meet demand today will eventually result in oversupply. That will lead to significantly higher overhead costs as pricing falls, resulting in much worse profit margins and a crash in earnings power. So, while analysts currently expect Micron's earnings per share to climb from $57.95 this year to $101.07 in two years, it could see a huge drop in earnings in 2029 as the supply/demand equilibrium shifts.
That's why investors are only paying 8.6 times earnings for Micron. But Micron has historically only traded at a P/E between 3 and 6 at the peak of its earnings cycle. The stock currently trades for close to 5 times 2028 earnings expectations. That suggests the stock might not climb much higher from here unless the demand cycle proves much larger than analysts expect. At their current stock prices, I'd rather buy Marvell, which should be able to produce more steady earnings growth at a fair price.
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Adam Levy has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, Marvell Technology, Meta Platforms, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
