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Up 15%+ in Q1: 2 AI Stocks Still Flashing "Strong Buy" for Q2
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Key Takeaways
Micron sees surging demand for AI memory, with HBM chips driving growth and pricing strength.
Micron projects $33.5B revenue and nearly 81% gross margin for fiscal Q3 2026 amid strong momentum.
Lam Research gains from rising chip equipment demand, guiding $5.7B March quarter revenues.
Despite a weak first quarter of 2026 for the broader market, some artificial intelligence (AI) stocks did show resilience and momentum. Micron Technology, Inc. (MU - Free Report) , which drives AI with its advanced memory solutions, and Lam Research Corporation (LRCX - Free Report) , a key “pick-and-shovel” AI play, witnessed their shares rise 17.9% and 24.8%, respectively, during the quarter.
With the AI boom gaining pace, both stocks are set for further gains in the second quarter. Here’s a look at why they remain solid buys as the new quarter kicks off.
Reasons to Be Bullish on Micron
Micron is witnessing an increase in demand for its high-value offerings, particularly AI-focused memory solutions. Its high-bandwidth memory (HBM) chips are gaining popularity for their ability to handle massive workloads while delivering enhanced power efficiency. Despite supply constraints, the demand for HBM chips remains robust as hyperscalers and data center operators continue expanding their AI infrastructure.
Interestingly, the demand-supply imbalance in HBM chips is expected to drive prices higher and help Micron gain over time. As a result, Micron projects revenues of around $33.5 billion for the third-quarter fiscal 2026, with gross margins nearly 81%, pointing to another significant leap and highlighting its strong financial momentum, according to investors.micron.com.
Micron has already delivered revenues of $23.86 billion in the second quarter of fiscal 2026, up 196.4% year over year and 74.9% from the previous month. This comes after a 57% year-over-year rise in revenues in the fiscal first quarter of 2026, indicating a sustained growth trajectory fueled by strong pricing power and dominance in the semiconductor industry.
Reasons to Be Bullish on Lam Research
Lam Research appears well-positioned for more gains ahead, supported by Micron’s growth trajectory. This is because increased capital spending by companies like Micron is expected to provide a meaningful boost to their business. Micron’s CEO, Sanjay Mehrotra, said that the company intends to invest more in equipment to expand memory chip production, a positive development for Lam Research, a leading semiconductor equipment manufacturer.
Lam Research is positioned for sustained growth, supported by its expanding product portfolio. Management has guided for higher revenues of around $5.7 billion for the March 2026 quarter, along with expectations of solid margins and improved earnings, according to newsroom.lamresearch.com.
Lam Research also ended 2025 on a solid note, reporting $5.34 billion in revenues for the December 2025 quarter, with a non-GAAP gross margin of 49.7%. Robust operational execution helped drive net income to $1.59 billion, underscoring the company’s healthy profitability.
Why Micron & Lam Research Are Buys Now
Micron’s AI-focused memory solutions are experiencing strong demand, driven by robust growth and reinforcing its leadership and pricing power in the semiconductor industry. Micron is also generating billions in surplus cash, which can be utilized for future growth initiatives and debt reduction, with adjusted free cash flow reaching $6.9 billion in the fiscal second quarter of 2026.
Lam Research is also set for continued growth, gaining from strong industry demand, expanding product offerings, and solid operational execution, making both Micron and Lam Research attractive investment opportunities.
Both companies are more efficient in generating profits than their peers. This is because Micron’s return on equity (ROE) of 42.6% far exceeds the Computer - Integrated Systems industry’s ROE of 16.5%.
Image Source: Zacks Investment Research
Similarly, Lam Research’s ROE of 62.8% significantly outpaces the 34.1% ROE of the Electronics - Semiconductors industry.
View the Zacks #1 Rank List
Image: Bigstock
Up 15%+ in Q1: 2 AI Stocks Still Flashing "Strong Buy" for Q2
Key Takeaways
Despite a weak first quarter of 2026 for the broader market, some artificial intelligence (AI) stocks did show resilience and momentum. Micron Technology, Inc. (MU - Free Report) , which drives AI with its advanced memory solutions, and Lam Research Corporation (LRCX - Free Report) , a key “pick-and-shovel” AI play, witnessed their shares rise 17.9% and 24.8%, respectively, during the quarter.
With the AI boom gaining pace, both stocks are set for further gains in the second quarter. Here’s a look at why they remain solid buys as the new quarter kicks off.
Reasons to Be Bullish on Micron
Micron is witnessing an increase in demand for its high-value offerings, particularly AI-focused memory solutions. Its high-bandwidth memory (HBM) chips are gaining popularity for their ability to handle massive workloads while delivering enhanced power efficiency. Despite supply constraints, the demand for HBM chips remains robust as hyperscalers and data center operators continue expanding their AI infrastructure.
Interestingly, the demand-supply imbalance in HBM chips is expected to drive prices higher and help Micron gain over time. As a result, Micron projects revenues of around $33.5 billion for the third-quarter fiscal 2026, with gross margins nearly 81%, pointing to another significant leap and highlighting its strong financial momentum, according to investors.micron.com.
Micron has already delivered revenues of $23.86 billion in the second quarter of fiscal 2026, up 196.4% year over year and 74.9% from the previous month. This comes after a 57% year-over-year rise in revenues in the fiscal first quarter of 2026, indicating a sustained growth trajectory fueled by strong pricing power and dominance in the semiconductor industry.
Reasons to Be Bullish on Lam Research
Lam Research appears well-positioned for more gains ahead, supported by Micron’s growth trajectory. This is because increased capital spending by companies like Micron is expected to provide a meaningful boost to their business. Micron’s CEO, Sanjay Mehrotra, said that the company intends to invest more in equipment to expand memory chip production, a positive development for Lam Research, a leading semiconductor equipment manufacturer.
Lam Research is positioned for sustained growth, supported by its expanding product portfolio. Management has guided for higher revenues of around $5.7 billion for the March 2026 quarter, along with expectations of solid margins and improved earnings, according to newsroom.lamresearch.com.
Lam Research also ended 2025 on a solid note, reporting $5.34 billion in revenues for the December 2025 quarter, with a non-GAAP gross margin of 49.7%. Robust operational execution helped drive net income to $1.59 billion, underscoring the company’s healthy profitability.
Why Micron & Lam Research Are Buys Now
Micron’s AI-focused memory solutions are experiencing strong demand, driven by robust growth and reinforcing its leadership and pricing power in the semiconductor industry. Micron is also generating billions in surplus cash, which can be utilized for future growth initiatives and debt reduction, with adjusted free cash flow reaching $6.9 billion in the fiscal second quarter of 2026.
Lam Research is also set for continued growth, gaining from strong industry demand, expanding product offerings, and solid operational execution, making both Micron and Lam Research attractive investment opportunities.
Both companies are more efficient in generating profits than their peers. This is because Micron’s return on equity (ROE) of 42.6% far exceeds the Computer - Integrated Systems industry’s ROE of 16.5%.
Image Source: Zacks Investment Research
Similarly, Lam Research’s ROE of 62.8% significantly outpaces the 34.1% ROE of the Electronics - Semiconductors industry.
Image Source: Zacks Investment Research
Therefore, Micron and Lam Research are rightly Zacks Rank #1 (Strong Buy) stocks. You can see the complete list of today’s Zacks Rank #1 stocks here.