Original Coverage & Source Attribution: www.fool.com
Two of the more popular artificial intelligence (AI) stocks among investors right now are Space Exploration Technologies (SPCX +1.25%) and Micron Technology (MU -0.66%). However, one clearly stands out as the better buy over the next five years: SpaceX.
Let’s look at why I’d buy SpaceX and avoid Micron.
SpaceX
If you want to invest in technological innovation and the future, SpaceX is one of your best options. Meanwhile, over the next five years, the company’s growth is likely to be driven mostly by leasing data center infrastructure, AI coding, and satellite internet.
SpaceX has some of the best economics in the entire data center space, getting returns on its AI infrastructure spending within one year through short-term leases. With demand for compute so constrained, the company has been renting out its excess compute capacity at huge prices. It has a $1.25 billion-per-month lease deal with Anthropic that runs through 2029, worth a total of $84.5 billion. The company is investing aggressively in AI infrastructure, and expects to have total capacity near 2 gigawatts at the end of 2026 and closer to 10 gigawatts than 5 gigawatts at the end of 2027.
Space Exploration Technologies
Today’s Change
(1.25%) $2.00
Current Price
$162.57
Key Data Points
Market Cap
Day’s Range
$160.61 – $166.38
52wk Range
$104.83 – $225.64
Volume
93M
Avg Vol
93M
In addition to its infrastructure-as-a-service business, the company has a huge opportunity with AI coding following its acquisition of Cursor. Morgan Stanley sees this as a $33 billion annual recurring revenue business by 2030, up from about $8 billion this year. The company’s Starlink satellite internet business is also growing quickly, is profitable, and generates recurring revenue. Meanwhile, any advancements with its Starship rocket and future ventures, like putting data centers in space, should get investors excited.
CEO Elon Musk has set a goal for SpaceX to reach $1 trillion in revenue in 2030. That’s well above the current $421.7 billion consensus, so if it gets anywhere close to Musk’s target, the stock will have significant upside over the next five years.
Micron Technology
One of the big three DRAM (dynamic random-access memory) makers, Micron, has been riding the memory supercycle to new heights. Soaring AI demand has led to surging memory prices, which have led to Micron’s revenue skyrocketing and gross margin ballooning. Both DRAM (73% of Micron’s revenue last quarter) and NAND (flash) are in short supply, which is driving up prices.
The current supply-demand imbalance in the DRAM market is expected to last through at least 2030, according to Micron rival SK Hynix. The reason is that the three companies that control the DRAM market, including Samsung, can’t increase capacity fast enough to meet rising demand. A special form of DRAM called high bandwidth memory (HBM) is the main memory driver, as graphics processing units (GPUs) need to be packaged with the chips to optimize their performance; otherwise, these super-expensive chips sit around idle way too long.
Today’s Change
(-0.66%) $-6.84
Current Price
$1,029.00
Key Data Points
Market Cap
Day’s Range
$1017.00 – $1054.17
52wk Range
$186.25 – $1255.00
Volume
19.9M
Avg Vol
32.5M
Gross Margin
80.71%
Dividend Yield
0.04%
The big three DRAM manufacturers are pouring most of their resources into HBM, but the companies are struggling to keep pace. One of the biggest reasons for this is that these companies are competing for the same extreme ultraviolet (EUV) lithography systems needed to make advanced logic chips, like GPUs and CPUs, and there is only one company in the world, ASML, that makes these machines. On top of that, HBM uses upward of 3 times the wafer capacity as ordinary DRAM, and it also takes years to build out new cleanrooms.
Micron bulls argue that the HBM story makes the stock a buy, but it actually misses the point of what has been driving the company’s performance. Micron actually derives only a small percentage of its revenue from HBM, likely less than 10%. It has the smallest HBM share in the market, at around 18% in Q2, in what is projected to be around a $55 billion market in 2026. Instead, Micron’s revenue and margins are being driven by the surge in conventional DRAM and NAND prices, which have actually been rising faster than HBM prices.
The problem is that if and when conventional memory prices normalize over the next several years, Micron’s earnings could collapse. That is why SpaceX is the better long-term bet, despite Micron trading at a much cheaper valuation on the surface.
