Micron Technology, Inc. MU shares rose 2.7% on Tuesday following NVIDIA Corporation’s NVDA announcement that Micron would be a critical supplier for its groundbreaking GeForce RTX 50 Blackwell graphics processing units (GPUs). The news, unveiled during NVIDIA’s CES 2025 keynote, underscores Micron’s leadership in the high-bandwidth memory (HBM) market and growing relevance in the rapidly evolving AI semiconductor ecosystem.

Micron stock has already risen 21% in the early days of 2025, sparking investor interest in whether this momentum can be sustained. For now, holding the stock appears to be a prudent move, given its long-term growth potential and industry positioning.

Image Source: Zacks Investment Research

NVIDIA’s Partnership Fuels Optimism About Micron

NVIDIA's announcement spotlighted Micron as the memory supplier for its new GeForce RTX 50 Blackwell GPUs, which promise groundbreaking AI integration for gaming and data processing. Micron’s HBM solutions will power these chips, offering 1.8 terabytes per second of bandwidth — double the performance of NVIDIA's previous-generation GPUs.

This collaboration isn't new. Micron and NVIDIA have a longstanding partnership in AI and gaming hardware. NVIDIA's decision to feature Micron in its latest consumer and gaming-focused products underscores Micron's leadership in delivering advanced memory solutions. With the AI revolution driving demand for high-performance computing, Micron’s HBM products are well-positioned to capture significant market share.

Micron’s Robust Long-Term Prospects

Micron’s long-term outlook remains strong despite short-term volatility. The company anticipates the HBM market to grow from $16 billion in 2024 to a staggering $100 billion by 2030. Such projections align with the increasing adoption of AI and advanced computing applications, which heavily rely on Micron’s DRAM and HBM products.

While Micron delivered weaker-than-expected revenue guidance of $7.9 billion for the second quarter of fiscal 2025 — below the Zacks Consensus Estimate of $8.96 billion — its focus on AI-related memory chips offers substantial growth potential. Should the company hit its second-quarter targets, it would still reflect impressive year-over-year revenue growth of 36% and a more than three-fold jump in earnings.

Image Source: Zacks Investment Research

Micron’s strategic partnerships with NVIDIA, Advanced Micro Devices, Inc. AMD and channel partners like Cadence Design Systems and Synopsys, Inc. SNPS solidify its market position. Advanced Micro Devices and Micron have partnered to provide chipset and logic solutions, including memory and storage. The company works with Cadence Design Systems and Synopsys to ensure successful memory verification IP (Internet Protocol).

Micron’s Attractive Valuation

Micron’s valuation adds to its appeal. With a forward 12-month price-to-earnings (P/E) ratio of 12.27 and a price-to-sales (P/S) ratio of 2.9, the stock trades at a discount compared to the Zacks Computer-Integrated Systems industry averages of 20.01 and 3.34, respectively. This valuation suggests that the stock offers an attractive entry point, especially given its growth prospects.

Image Source: Zacks Investment Research

Short-Term Headwinds for Micron

Despite its promising long-term trajectory, Micron faces challenges in the near term. Weak consumer spending has hurt demand for memory chips used in personal computers (PCs) and smartphones, leading to a 10% sequential decline in revenues from its Embedded Business Unit during the first quarter of fiscal 2025.

PC and smartphone manufacturers also continue to adjust their purchases due to tepid demand. Micron projects only low-single-digit growth in smartphone unit volumes and mid-single-digit growth in PC sales for the calendar year 2025, which could weigh on DRAM sales.

Geopolitical tensions also pose risks. The ongoing U.S.-China trade war creates uncertainty, particularly as China is a major market for Micron. This dependence could expose the company to regulatory or economic shocks.

Conclusion: Hold Micron Stock for Now

Micron’s collaboration with NVIDIA and leadership in HBM technologies underscore its long-term potential in AI and high-performance computing. While short-term challenges, including weak consumer spending and geopolitical risks, persist, the stock’s attractive valuation and robust growth prospects make it a solid hold for now.

Investors seeking exposure to the transformative AI-driven semiconductor industry would do well to remain patient with Micron as it navigates near-term headwinds. Micron carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Synopsys, Inc. (SNPS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research