Best Undervalued AI Stocks 2026: Why Analysts Love Micron and Alphabet

TLDR

• Micron Technology received a $400 price target from UBS, up from $300, based on sustained AI memory demand
• Supply constraints limit Micron to fulfilling only 50-75% of orders from top customers
• UBS analysts boosted Micron’s 2026 EPS forecast to $45 and 2027 forecast to $60
• The memory chip maker’s stock gained 237% in 12 months while trading at 7.1x forward earnings
• Alphabet offers AI exposure at 27.9x forward P/E with $155 billion Google Cloud backlog

Micron Technology received an upgraded price target from UBS analysts this week. The firm set a new target of $400, up from the previous $300 mark. UBS maintained its Buy rating on the memory chip manufacturer.

Micron Technology, Inc., MU

The price target increase came after UBS analyst Timothy Arcuri met with Micron’s executive team. The meetings included discussions with the company’s CEO and CFO. The $400 target sits 16% above Tuesday’s closing price.

Micron’s leadership told UBS the current memory market cycle will extend beyond typical patterns. AI infrastructure buildout is driving this longer cycle. The company faces supply limitations that prevent it from meeting full customer demand.

Current production capacity allows Micron to fulfill between 50% and 75% of orders from its largest clients. This supply-demand imbalance supports higher pricing power. UBS revised its earnings projections upward based on these market conditions.

The firm now expects Micron to earn $45 per share in 2026, up from the prior estimate of $41. For 2027, UBS raised its forecast to $60 per share from $42. These estimates reflect the sustained demand for memory products in AI applications.

Micron’s AI Memory Business

Micron reported first quarter fiscal 2026 revenue of $13.6 billion, marking 57% growth year over year. Earnings per share reached $4.78, up 167% from the same period last year. Data center and AI customers accounted for the bulk of this demand.

The company has sold out its entire 2026 production of high-bandwidth memory. HBM chips are essential components in AI servers and accelerators. Volume and pricing agreements are already locked in for next year’s output.

UBS projects the HBM market will expand from $35 billion in 2025 to $100 billion by 2028. Micron controls roughly 21% of this market. The transformation of DRAM from a commodity product to a strategic component has changed pricing dynamics.

Memory chips now directly impact AI system performance across multiple sectors. These include data centers, self-driving vehicles, medical imaging systems, and edge computing devices. Each new generation of AI hardware requires more memory capacity.

Alphabet’s Cloud and AI Revenue

Alphabet provides another path to AI investment at a forward P/E ratio of 27.9x. The tech giant integrates AI throughout its Search, YouTube, and cloud computing operations. Google Cloud reported a $155 billion backlog at the end of Q3.

Alphabet Inc., GOOGL

More than 70% of Google Cloud customers now use the company’s AI tools and services. The platform benefits from custom Tensor Processing Units that reduce operational costs. These chips deliver better performance per watt than standard processors.

Alphabet’s ecosystem includes over 3 billion Android devices and 2.7 billion YouTube users monthly. This user base generates data that improves AI model training and targeting. The company applies AI to optimize ad placements and increase conversion rates.

Micron stock has climbed 237% over the past year, outpacing most large-cap technology stocks. The company trades at a forward P/E multiple of 7.1x despite its growth trajectory. Both Micron and Alphabet represent AI infrastructure plays with different risk profiles and valuation levels.

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