This Fund Manager Has a Brilliant Strategy for Investing in AI Stocks

MUNASDAQMicron Technology, Inc.·May 30, 2026, 01:30 AM·The Motley Fool

Impact

(High)

Sentiment

(Positive)

Stonvex AI Summary

Hedge fund manager Gavin Baker identifies Micron (MU) and other memory chip manufacturers as undervalued relative to optical stocks in the AI sector, arguing that cheaper AI-related stocks should outperform expensive ones if the AI cycle continues uniformly across sectors.

Positive

■Micron identified as undervalued by prominent hedge fund manager, suggesting potential upside if valuation thesis plays out
■Memory chips are essential infrastructure for AI growth; demand should remain strong if AI adoption accelerates as expected
■Relative valuation gap between memory and optical stocks may correct in Micron's favor over the long term

Negative

■Valuation inefficiency thesis depends on uniform AI growth across sectors, which may not materialize if certain applications underperform
■Memory chip market is highly cyclical and competitive; supply/demand imbalances could pressure margins despite AI tailwinds
■Strategy relies on multiple expansion reverting; if optical stocks maintain premium valuations, memory stocks may underperform despite being cheaper

Original excerpt

Hedge fund manager Gavin Baker identifies a valuation inefficiency in AI stocks, arguing that memory chips (Micron, SanDisk) and Nvidia are undervalued while optical stocks (Lumentum, Coherent) are overvalued based on multiple expansion. Baker suggests that if the AI cycle continues uniformly across sectors, cheaper stocks should outperform expensive ones over the long term.

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Summary and sentiment are generated by AI for educational purposes. Always verify with the original source before making investment decisions.