Beyond the Hype: Two Hardware Plays Poised to Capitalize on AI's Next Phase in 2026
The Nasdaq-100's impressive 20% gain in 2025 was fueled largely by unrelenting optimism in artificial intelligence. Yet, beneath the surface, a stark reality persists: the core innovators powering this revolution, like OpenAI and Anthropic, are burning through capital at a staggering rate. A significant portion of that spend flows to the expensive, specialized hardware required to train and run massive AI models.
As we look to 2026, a strategic pivot is underway. Savvy investors are increasingly looking past the flashy applications to the foundational "picks and shovels" of the AI gold rush—the companies manufacturing the critical components. Here, two names stand out for their distinct roles in enabling the next wave of AI infrastructure: Micron Technology (NASDAQ: MU) and Broadcom (NASDAQ: AVGO).
Micron Technology: An Undervalued Engine for AI Memory
After years of cyclical struggles, Micron is experiencing a renaissance, with shares soaring nearly 400% in the past year. The catalyst? Generative AI's insatiable appetite for high-bandwidth memory (HBM). While Micron has long been a leader in commoditized DRAM and NAND flash memory, the AI era is rewriting the rules, creating a specialized, high-margin segment where its technology is crucial.
Analysts at Mizuho Financial Group project NAND memory prices could surge 330% year-over-year in 2026, driven by a frantic build-out of AI data centers by cloud giants. Despite this transformative demand, Micron trades at a forward price-to-earnings multiple of just 13, a dramatic discount to the S&P 500's average of 22. This disconnect suggests the market may still be undervaluing the structural shift AI is creating for memory suppliers facing a prolonged supply shortage.
Broadcom: Powering the Custom Chip Revolution
If GPUs are the brains of AI, companies are now seeking bespoke neural networks. While Nvidia dominates the market for general-purpose AI chips, Broadcom is emerging as the partner of choice for tech giants designing custom silicon. Its business model focuses on manufacturing application-specific integrated circuits (ASICs), which offer clients like OpenAI—who partnered with Broadcom last September—greater efficiency, cost control, and supply chain security.
This trend toward vertical integration in AI hardware presents a massive growth avenue. Broadcom's Q4 results underscore this: revenue jumped 28% to $18 billion, with AI semiconductor sales skyrocketing 74% to $6.5 billion. While its forward P/E of 33 commands a premium, it reflects the high-value, sticky nature of its custom design wins in an industry desperate to curb massive operational losses.
The Bottom Line
Both companies offer compelling, yet different, paths to capitalize on AI's infrastructure build-out. Micron presents a deep-value opportunity in an essential component facing a supply crunch. Broadcom offers a premium play on the strategic shift toward proprietary AI chips. For investors seeking exposure with a margin of safety, Micron's rock-bottom valuation and critical role in the AI supply chain make it a particularly compelling candidate for 2026.
Sarah Chen, Portfolio Manager at TechGrowth Capital: "This analysis correctly identifies the infrastructure pivot. The software layer is overcrowded and burning cash. The real, defensible moats are being built at the hardware level, especially in memory and custom silicon. Micron's valuation is an anomaly the market will correct."
Marcus Johnson, Independent Market Analyst: "It's the same old story—chasing last year's winners. The hype around AI hardware is reaching a peak. Margins in memory are famously cyclical, and this 'shortage' will correct faster than anyone thinks. Investors piling in now are setting themselves up for disappointment."
David Lee, Engineering Director at a Cloud Startup: "From our procurement talks, the demand for HBM and custom ASICs is very real and backlogged into 2027. We're redesigning systems for efficiency, not just raw power. Companies like Broadcom that enable that are integral to our roadmap."
Rita Alvarez, Retired Banker & Individual Investor: "Finally, a take that looks beyond Nvidia! It makes sense. In every boom, the toolmakers often win with less risk. I'm intrigued by Micron—it feels like there's still room to run if the AI demand is as solid as they say."