The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Jim Cramer put Intel Corporation (NASDAQ:INTC) and Micron Technology, Inc. (NASDAQ:MU) at the top of his technology stock list during the September 17 episode of Mad Money, as he said:
Yesterday, I said that people would buy tech. We got that in spades today. I continue to recommend the cybersecurity stocks, and I'd add Okta to the list because rogue agents cannot be stopped unless we can identify them first. That's Okta's job. I still think that Intel, as I tell club members, is the best stock in show, and Micron, number two… Both their products are in short supply. I just bought some Micron, candidly.
Intel's Product Recovery Meets a Costly Foundry Buildout
Intel Corporation's (NASDAQ:INTC) second-quarter revenue rose 25% year over year to $16.1 billion, while Data Center and AI revenue increased 59% to $6.3 billion. Intel Products generated $4.8 billion of operating income in the second quarter, up from $2.7 billion a year earlier, while Data Center and AI operating income increased $1.8 billion to $2.5 billion.
The company said client supply constraints are expected to ease in the second half of 2026, while industry-wide constraints affecting Data Center and AI products are expected to persist into 2027.
Micron's Margins Show the Value of Tight Supply
Micron Technology, Inc.'s (NASDAQ:MU) fiscal third-quarter GAAP operating margin reached 80.4%, up from 67.6% in the prior quarter and 23.3% a year earlier. Its non-GAAP operating margin was 81.2%. Operating cash flow reached $25.4 billion. The company also said DRAM inventories were "very tight and below 120 days."
Intel CEO Lip-Bu Tan offered a broader view of the memory shortage on September 15. He said capacity was "very limited," that "many projects are being delayed because they cannot secure enough memory," and that memory prices had risen five to seven times. He noted, "It actually happened, and the situation will get worse."
Bear Case is About Execution and Normalization
Intel Corporation's (NASDAQ:INTC) financial risk is the gap between improving product economics and the cost of its manufacturing strategy. Intel Foundry generated $5.8 billion of revenue in Q2 although roughly $5.5 billion came from intersegment transactions and just $293 million was external revenue. The segment posted a $2.1 billion operating loss, compared with a $3.2 billion loss a year earlier.
Micron Technology, Inc. (NASDAQ:MU) faces the opposite side of the memory cycle. Its 80.4% GAAP operating margin is more than three times the year-earlier level, leaving earnings exposed to a deterioration in memory pricing or supply conditions. At the same time, it spent $7.1 billion on net capital expenditures in the fiscal third quarter, adding capacity while the market remains tight.
Hedge Funds Increased Exposure to Both Stocks
According to Insider Monkey's tracking of more than 1,000 hedge funds, 138 hedge funds held Intel in Q2, up from 112 in Q1. Micron was held by 184 hedge funds, compared with 154 in the first quarter. As for the short interest, Intel's was roughly 3.0% to 3.3% of float, while Micron's was approximately 2.6% of float.
The companies offer different exposure to the semiconductor cycle. Intel Corporation (NASDAQ:INTC) is seeing stronger demand for its products while rebuilding its manufacturing business, while Micron Technology, Inc. (NASDAQ:MU) is benefiting from tight memory supply and pricing. Intel needs better yields, higher factory utilization and eventually more external foundry revenue to continue narrowing its large Foundry loss, while Micron needs tight memory conditions to persist as it invests heavily in additional supply.
While we acknowledge the potential of INTC and MU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: Jim Cramer Favors BWX Technologies (BWXT) Over Cameco (CCJ) and Jim Cramer Believes Apple (AAPL) Could See "Off The Charts" Demand For Its New Foldable.
Disclosure: None. Follow Insider Monkey on Google News.
Jim Cramer’s Latest Thoughts on Micron (MU) Insider Monkey • 2mo ago MU
Jim Cramer’s Latest Thoughts on Micron (MU)
Jim Cramer Believes “Micron Right Now is on a High-Level Run Rate” Insider Monkey • 9mo ago MU
Jim Cramer Believes “Micron Right Now is on a High-Level Run Rate”
Jim Cramer Believes Companies Like Intel “Will Do Very Well for the Rest of the Year” Insider Monkey • 4mo ago INTC ARM
Jim Cramer Believes Companies Like Intel “Will Do Very Well for the Rest of the Year”
Jim Cramer Is Bullish on Micron (MU) as AI Fuels Memory Demand Insider Monkey • 24d ago MU
Jim Cramer Is Bullish on Micron (MU) as AI Fuels Memory Demand
Jim Cramer on Micron: “I Think It’ll Prove to Be a More Meaningful Position as It Goes Down” Insider Monkey • 5mo ago MU
Jim Cramer on Micron: “I Think It’ll Prove to Be a More Meaningful Position as It Goes Down”
Jim Cramer on Micron: “The Demand Is the Strongest I’ve Ever Seen” Insider Monkey • 4mo ago MU ^GSPC
Jim Cramer on Micron: “The Demand Is the Strongest I’ve Ever Seen”
Jim Cramer Named Micron Technology (MU) His Top Memory Pick Insider Monkey • 1mo ago MU SNDK
Jim Cramer Named Micron Technology (MU) His Top Memory Pick
Jim Cramer Says Micron Needs a Massive Beat and Raise to Keep Soaring Insider Monkey • 2mo ago MU
Jim Cramer Says Micron Needs a Massive Beat and Raise to Keep Soaring
Jim Cramer Proven Right About Intel (INTC) Shares Insider Monkey • 4mo ago INTC
Jim Cramer Proven Right About Intel (INTC) Shares
Jim Cramer Reveals A Firm That’s Better Than Micron Technology Inc. (MU) Insider Monkey • 2mo ago MU
Jim Cramer Reveals A Firm That’s Better Than Micron Technology Inc. (MU)
