2 AI Infrastructure Stocks That Could Rise 25% and 80% Despite Overdone Spending Fears

Two of the hottest stocks in the market right now are Advanced Micro Devices (AMD +4.69%) and Micron (MU 0.42%). And according to some Wall Street analysts, these stocks still have more room to run.

Baird analyst Tristan Gerra has a street-high $625 price target on AMD, up from $300 ahead of the company’s early May earnings report, representing about 25% from here (as of May 26). Meanwhile, UBS analyst Timothy Arcuri just tripled his price target on Micron from $535 to $1,625, representing around 80% upside.

Let’s take a look at why these two artificial intelligence (AI) stocks are so hot right now and whether or not it’s too late to get in.

AMD: A huge inference and agentic AI opportunity

AMD is riding two of the most powerful trends in AI right now in inference and agentic AI. These markets are just starting to boom, and AMD is well-positioned to see explosive growth in the coming years as a result.

While rival Nvidia has dominated the AI model training market, helped by most foundational AI code being written on its CUDA software platform, inference is less technologically demanding and tends to be more memory-bound than compute-bound. With hyperscalers looking to diversify away from Nvidia and looking for all the compute power they can get their hands on, AMD is set to be a big beneficiary. Its chiplet design can pack in more high-bandwidth memory (HBM), making its graphics processing units (GPUs) well-suited for inference. Meanwhile, it has already signed large GPU deals worth over $100 billion each, which should be a huge growth driver in the years ahead.

At the same time, the company has a huge opportunity in the data center central processing unit (CPU) market due to the rise of agentic AI. CPUs act like the brains of a computer, and to manage AI agents, AI data centers are going to need a whole lot more high-power CPUs. While the GPU-to-CPU ratio for training was 8:1, it moves to 1:1 for agentic AI. AMD is one of the leaders in this space in a market that it expects to rise to over $120 billion in the next few years.

Given its huge growth opportunities ahead, AMD looks poised to continue having solid upside from here.

Image source: The Motley Fool.

Micron: Rising from the memory supercycle

Today’s Change

(-0.42%) $-3.92

Current Price

$924.49

Key Data Points

Market Cap

$1.0T

Day’s Range

$904.80 – $949.44

52wk Range

$92.22 – $956.16

Volume

1.4M

Avg Vol

47.6M

Gross Margin

58.54%

Dividend Yield

0.05%

The rise of Micron has been nothing short of spectacular. The stock is up more than 800% over the past year, largely due to earnings growth, and it still trades at a forward price-to-earnings (P/E) ratio of just 8.6 times fiscal 2027 analyst estimates.

Micron is one of the big three dynamic random-access memory (DRAM) makers, along with Korean competitors SK Hynix and Samsung. Right now, the entire DRAM market is very undersupplied due to surging demand for HBM. GPUs and other AI chips need to be packaged with HBM to optimize their performance, and as noted above with AMD, inference tends to be much more memory-bound than compute-bound, which is just adding another tailwind.

With the big memory makers focused on HBM and this specialized form of DRAM requiring upwards of three times the wafer capacity as ordinary DRAM, overall prices have skyrocketed, which has led to huge sales growth and enormous margin expansion for Micron and its competitors. And while these companies are working to increase capacity, they are also constrained by the finite number of EUV and DUV machines that ASML can produce each year.

While the memory market has historically been very cyclical with large boom-and-bust cycles, the big three players have started to lock in three to five-year commitments for the first time, trading some near-term price for more long-term visibility. Together with high HBM growth, ASML machine bottlenecks, and a low valuation, Micron could have a lot more room to run.