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Buy 2 Computer-Integrated Systems Giants With Extensive AI Applications
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Key Takeaways
Micron is gaining from AI-fueled demand for DRAM, HBM, and NAND boosting data center sales.
MU forecasts revenue growth of 33.9% and earnings growth of 62.4% for the fiscal year ending August 2026.
IBM strengthens AI offerings with Hakkoda acquisition, SAP tie-up and its watsonx platform rollout.
The Zacks-defined Computer-Integrated Systems industry is currently in the top 11% of the Zacks Industry Rank. In the past year, the industry has provided 18.9% returns, while its year-to-date return is 26.6%. Since it is ranked in the top half of the Zacks Ranked Industries, we expect the consulting services industry to outperform the market over the next three to six months.
We narrowed our search to two U.S. behemoths from this space for investment. These two companies currently carry a favorable Zacks Rank and have double-digit short-term price upside potential. The stocks are: Micron Technology Inc. (MU - Free Report) and International Business Machines Corp. (IBM - Free Report) .
The chart below shows the price performance of our two picks year to date.
Image Source: Zacks Investment Research
Micron Technology Inc.
Micron Technology has become a leader in the AI infrastructure boom due to strong demand for its high-bandwidth memory (HBM) solutions. Record sales in the data center end market and accelerating HBM adoption have been driving MU’s Dynamic Access Random Memory (DRAM) revenues higher.
The growing adoption of artificial intelligence (AI) servers is reshaping the DRAM market as these systems require significantly more memory than traditional servers. This is boosting demand for both high-capacity DIMMs (Dual In-line Memory Module) and low-power server DRAM. MU is capitalizing on this trend with its leadership in DRAM technology and a strong product roadmap that includes HBM4, slated for volume production in 2026.
Micron’s diversification strategy is also bearing fruit. MU has created a more stable revenue base by shifting its focus away from the more volatile consumer electronics market and toward resilient verticals such as automotive and enterprise IT.
As AI adoption accelerates, the demand for advanced memory solutions like DRAM and NAND is soaring. MU’s investments in next-generation DRAM and 3D NAND ensure that it remains competitive in delivering the performance needed for modern computing.
Micron has an expected revenue and earnings growth rate of 33.9% and 62.4%, respectively, for the next year (ending August 2026). The Zacks Consensus Estimate for next year’s earnings has improved 6.4% over the last 30 days.
Attractive Price Upside Potential
Year to date, Micron has provided a 44.6% return. Yet, the short-term average price target of brokerage firms for the stock represents an increase of 24.9% from the last closing price of $122. The brokerage target price is currently in the range of $75-$200. This indicates a maximum upside of 63.9% and a downside of 38.5%.
International Business Machines Corp.
International Business Machines has been witnessing healthy demand trends for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth. The acquisition of Hakkoda has strengthened IBM’s data expertise and augmented its capability to support clients’ AI transformation initiatives.
IBM is collaborating with SAP to tap generative AI technology within the retail industry. The collaboration is likely to facilitate higher productivity and help accelerate business transformation in consumer-packaged goods and retail firms.
IBM’s growth is expected to be aided by analytics, cloud computing and security over the long term. With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing.
This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions.
IBM is focusing more on smaller, domain-focused AI models, emphasizing reliability, cost-efficiency and practical enterprise utility. IBM’s watsonx platform has been the core technology platform for its AI capabilities. It delivers the value of foundational models to the enterprise, enabling them to be more productive.
This enterprise-ready AI and data platform comprises three products to help organizations accelerate and scale AI — the watsonx.ai studio for new foundation models, generative AI and machine learning, the watsonx.data fit-for-purpose data store built on an open lake house architecture and the watsonx.governance toolkit to help enable AI workflows to be built with responsibility and transparency. IBM currently carries a Zacks Rank #2 (Buy).
Impressive Estimate Revisions
International Business Machines has an expected revenue and earnings growth rate of 6.4% and 7.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.
IBM has an expected revenue and earnings growth rate of 4.4% and 7.3%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.6% over the last 30 days.
Solid Price Upside Potential
Year to date, International Business Machines has provided a 11.8% return. The short-term average price target of brokerage firms for the stock represents an increase of 13.5% from the last closing price of $245.73. The brokerage target price is currently in the range of $198-$350. This indicates a maximum upside of 42.4% and a downside of 19.4%.
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Buy 2 Computer-Integrated Systems Giants With Extensive AI Applications
Key Takeaways
The Zacks-defined Computer-Integrated Systems industry is currently in the top 11% of the Zacks Industry Rank. In the past year, the industry has provided 18.9% returns, while its year-to-date return is 26.6%. Since it is ranked in the top half of the Zacks Ranked Industries, we expect the consulting services industry to outperform the market over the next three to six months.
We narrowed our search to two U.S. behemoths from this space for investment. These two companies currently carry a favorable Zacks Rank and have double-digit short-term price upside potential. The stocks are: Micron Technology Inc. (MU - Free Report) and International Business Machines Corp. (IBM - Free Report) .
The chart below shows the price performance of our two picks year to date.
Image Source: Zacks Investment Research
Micron Technology Inc.
Micron Technology has become a leader in the AI infrastructure boom due to strong demand for its high-bandwidth memory (HBM) solutions. Record sales in the data center end market and accelerating HBM adoption have been driving MU’s Dynamic Access Random Memory (DRAM) revenues higher.
The growing adoption of artificial intelligence (AI) servers is reshaping the DRAM market as these systems require significantly more memory than traditional servers. This is boosting demand for both high-capacity DIMMs (Dual In-line Memory Module) and low-power server DRAM. MU is capitalizing on this trend with its leadership in DRAM technology and a strong product roadmap that includes HBM4, slated for volume production in 2026.
Micron’s diversification strategy is also bearing fruit. MU has created a more stable revenue base by shifting its focus away from the more volatile consumer electronics market and toward resilient verticals such as automotive and enterprise IT.
As AI adoption accelerates, the demand for advanced memory solutions like DRAM and NAND is soaring. MU’s investments in next-generation DRAM and 3D NAND ensure that it remains competitive in delivering the performance needed for modern computing.
Micron currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Strong Estimate Revisions
Micron has an expected revenue and earnings growth rate of 33.9% and 62.4%, respectively, for the next year (ending August 2026). The Zacks Consensus Estimate for next year’s earnings has improved 6.4% over the last 30 days.
Attractive Price Upside Potential
Year to date, Micron has provided a 44.6% return. Yet, the short-term average price target of brokerage firms for the stock represents an increase of 24.9% from the last closing price of $122. The brokerage target price is currently in the range of $75-$200. This indicates a maximum upside of 63.9% and a downside of 38.5%.
International Business Machines Corp.
International Business Machines has been witnessing healthy demand trends for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth. The acquisition of Hakkoda has strengthened IBM’s data expertise and augmented its capability to support clients’ AI transformation initiatives.
IBM is collaborating with SAP to tap generative AI technology within the retail industry. The collaboration is likely to facilitate higher productivity and help accelerate business transformation in consumer-packaged goods and retail firms.
IBM’s growth is expected to be aided by analytics, cloud computing and security over the long term. With a surge in traditional cloud-native workloads and associated applications, along with a rise in generative AI deployment, there is a radical expansion in the number of cloud workloads that enterprises are currently managing.
This has resulted in heterogeneous, dynamic and complex infrastructure strategies, which have led firms to undertake a cloud-agnostic and interoperable approach to highly secure multi-cloud management, translating into a healthy demand for IBM hybrid cloud solutions.
IBM is focusing more on smaller, domain-focused AI models, emphasizing reliability, cost-efficiency and practical enterprise utility. IBM’s watsonx platform has been the core technology platform for its AI capabilities. It delivers the value of foundational models to the enterprise, enabling them to be more productive.
This enterprise-ready AI and data platform comprises three products to help organizations accelerate and scale AI — the watsonx.ai studio for new foundation models, generative AI and machine learning, the watsonx.data fit-for-purpose data store built on an open lake house architecture and the watsonx.governance toolkit to help enable AI workflows to be built with responsibility and transparency. IBM currently carries a Zacks Rank #2 (Buy).
Impressive Estimate Revisions
International Business Machines has an expected revenue and earnings growth rate of 6.4% and 7.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.
IBM has an expected revenue and earnings growth rate of 4.4% and 7.3%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.6% over the last 30 days.
Solid Price Upside Potential
Year to date, International Business Machines has provided a 11.8% return. The short-term average price target of brokerage firms for the stock represents an increase of 13.5% from the last closing price of $245.73. The brokerage target price is currently in the range of $198-$350. This indicates a maximum upside of 42.4% and a downside of 19.4%.