a lot Technology stocks It will soar in early 2025. The artificial intelligence (AI) boom that began about two years ago is going strong. The economy has been performing better recently, giving fast-growing companies better access to low-cost financing. And many of last year’s best-performing companies are coming back from sharp price declines in 2022, when the inflation crisis was in full swing and the ChatGPT revolution had not yet begun.
But some tech stocks didn’t get the memo about a rally in 2024. Rather, they continued to improve their business prospects with or without investor support. As a result, I see some great values in the technology sector right now. In particular, you should consider grabbing a few stocks Micron technology(NASDAQ: MU) and year(NASDAQ:ROKU) these days.
Memory chip maker Micron is playing a very active role in the AI craze.
The machines that train and run large language models (LLMs) like ChatGPT need high-powered processors from companies like Nvidia(Nasdaq: NVDA) or Advanced micro devices(NASDAQ:AMD)But this is not the whole story. The same systems require massive amounts of high-speed RAM and NAND memory for long-term storage. AI accelerators from Nvidia and AMD also contain large amounts of both types of memory. And when you buy a modern smartphone with built-in AI functions, that device also needs much more memory than the previous generation.
I could name many factors driving the huge demand for memory chips, but the AI trend is at the top of the list. The new category of high-bandwidth memory (HBM) represented a total addressable market (TAM) of $16 billion last year. This revenue opportunity is expected to quadruple over the next three years, growing further to reach $100 billion in 2030.
“This HBM growth will be transformative for Micron, and we are excited about industry leadership in this important product category,” Micron CEO Sanjay Mehrotra said in a report last month. First quarter earnings call. “We expect to be a leading HBM supplier with the most robust, reliable and industry-leading technology implementation roadmap and track record.”
In fact, Nvidia’s latest and greatest AI accelerators ship with many gigabytes of Micron HBM3E memory. The company will soon ramp up production of the next generation of the HBM4 production line, offering 50% higher performance and significantly lower electrical power consumption compared to the previous generation.
A graph showing the annual gains and losses of Micron’s stock price over time.
Data collected from Google Finance on January 24, 2025. Graph by author.
So, Micron is positioned to grow its business impressively over the next few years. This represents a rebound in a highly cyclical industry, where the three largest chip suppliers (including Micron) continue to adapt to very different end-user demand from year to year.
Micron shares enjoyed a big jump in 2023, but that was just a bounce from the bottom of a rough low point for semiconductors overall. The inflation crisis in 2022 coincided with a global shortage of chip-making facilities and materials, indicating side effects of the COVID-19 pandemic. Last year’s chart was supposed to continue Micron’s positive trend, but the stock ended 2024 roughly where it started.
The cyclical recovery will continue this year, supported by new demand for chips from the AI market and other consumer-facing trends. Micron expects its slim margins to widen, cutting the stock’s price-earnings ratio from 30 times trailing earnings to 9 times next year’s estimates.
That’s a deal breaker in my eyes.
Media streaming technology developer Roku may not seem cheap at first glance. The company has not been profitable in recent years, with negative operating income and modest revenue growth over the past four quarters. So, valuation metrics don’t apply based on profit, and analysts don’t even expect positive earnings in 2025. I mean, even the most optimistic analyst firms write this target in red ink.
The Roku stock chart makes sense if you stop your Roku analysis there. Shares are down 11% over the past year and are trading at a basement deal valuation of 3.0 times trailing sales.
But this is far from the whole story.
I’m talking about an established leader in the North American market for streaming media devices and software platforms. Without Roku’s easy-to-use interface, you can stream media services from the likes of Netflix(Nasdaq: NFLX), Walt Disneyand Discover Warner Bros It will be limited to websites and smartphone applications. These big, beautiful living room screens will no longer be a substitute for going to the movies. I mean there are other names in this race, but Roku’s polished user experience really has a dominant market share.
The next step is to expand North American control throughout the world. Roku has gotten off to a great start in Latin America and has made inroads into a few European countries. But it’s still early days, and Roku has not yet included international sales in its quarterly business reports. Meanwhile, Netflix collects 56% of its quarterly revenue from overseas markets – a big market indeed.
A chart showing Roku stock’s annual gains and losses over time.
Data collected from Google Finance on January 24, 2025. Graph by author.
At the same time, the inflation crisis has led to a deep decline in the digital advertising sector. Why spend a lot of money on effective and expensive marketing campaigns when people are not ready to go shopping? I can’t wait to see Roku enjoy the upside of this situation as shoppers return to normal spending patterns and advertisers want to buy ad space again.
Just like Micron, Roku looks significantly undervalued in January 2025.
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Anders Billund He has positions at Micron Technology, Netflix, Nvidia, Roku, and Walt Disney. The Motley Fool has positions in Advanced Micro Devices, Netflix, Nvidia, Roku, Walt Disney, and Warner Bros. Discovery and recommend it. The Motley Fool has Disclosure policy.
