3 Growth Stocks to Buy as Treasury Yields Fall: MU, STX & VLO

Treasury yields have pulled back as falling oil prices ease inflation fears and weaker economic signals increase demand for government bonds. The 10-year Treasury yield fell to about 4.64% yesterday from 4.74% at the end of the previous week, although it edged slightly higher in early trading today (FRED). The recent decline followed a more than 2% drop in Brent crude, which fell to around $86.45 a barrel on hopes of safer navigation through the Strait of Hormuz after renewed Iran-Oman talks. Reuters reported that the move reduced concerns about another energy-driven inflation shock.

The inflation picture has also improved slightly. The Bureau of Labor Statistics reported that July CPI increased 3.4% year over year, while core CPI rose 2.5%. Energy prices fell 1.5% in July, although the energy index remained 14.7% above its year-ago level.

The decline in Treasury yields is positive for growth stocks because lower yields reduce the rate investors use to value future earnings. However, the move does not necessarily mean that the Fed is preparing to cut interest rates. The Fed kept its benchmark rate at 3.5%-3.75% in July and continues to view inflation as elevated relative to its 2% target.

The key question now is whether softer economic data and easing energy prices will translate into sustained disinflation, giving the Fed room to reduce rates later.

Below we have selected three names, Micron Technology MU, Seagate Technology STX and Valero Energy VLO, which stand out for their earnings momentum and exposure to structural growth trends.

Why the Rate Move Matters for Growth Stocks

The Fed explains that the value of equities can be viewed as the present value of expected future dividends/cash flows, with the 10-year Treasury yield serving as a proxy for the risk-free rate in its valuation framework. A lower risk-free rate can therefore reduce the discount rate applied to future cash flows, ceteris paribus.

The distinction between lower bond yields and lower Fed rates is important. Growth stocks can benefit even without an immediate policy cut because a decline in longer-term Treasury yields reduces the discount rate applied to future cash flows. That can make high-growth companies more attractive relative to bonds and other rate-sensitive assets.

Recent market action illustrates how lower yields can coincide with a rebound in growth stocks. On Aug. 25, the Nasdaq Composite gained 0.66%, while the 10-year Treasury yield fell to about 4.64% and oil prices dropped sharply.

3 Growth Stocks to Buy Now

Micron: The company is benefiting from the AI-driven increase in memory intensity. Third-quarter fiscal 2026 revenues surged 58% year over year, while the company guided fiscal fourth-quarter revenues of $50 billion, reflecting continued demand for high-performance memory. HBM4 is already in high-volume shipments, while Micron plans more than $250 billion in U.S. manufacturing and R&D investment through 2035. Its newly announced $10 billion research hub further strengthens its long-term AI and memory positioning.

Over the past three months, the Zacks Consensus Estimate for MU’s fiscal fourth quarter and full-year EPS has jumped 41.1% and 23.8%, respectively. The stock currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), offer the best upside potential.

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Seagate: The company offers exposure to AI-driven growth in data storage without relying directly on GPU sales. Fiscal 2026 revenues rose 34% over fiscal 2025, while fiscal fourth-quarter revenues jumped 48% year over year. Non-GAAP gross margin expanded to 52.7% in the fiscal fourth quarter from 37.9% a year earlier, while quarterly free cash flow surged 163% to $1.1 billion. Seagate also returned $283 million to shareholders in the quarter, as robust cloud data-center demand and AI-driven data generation supported its mass-capacity storage business.

Over the past 30 days, the Zacks Consensus Estimate for STX’s fiscal first quarter and full-year fiscal 2027 EPS has jumped 23.1% and 25.7%, respectively. The stock currently carries a Zacks Rank #1 and has a Growth Score of A.

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Valero: The company provides earnings growth and diversification beyond technology. Second-quarter 2026 revenues surged 49% year over year, while net income attributable to Valero shareholders jumped more than 420% to $3.72 billion. Refining operating income increased 252%, driven by stronger refining margins. Valero operates 14 refineries with approximately 3.0 million barrels per day of throughput capacity, giving investors exposure to refining profitability and fuel demand.

Over the past 30 days, the Zacks Consensus Estimate for STX’s third quarter and full-year 2026 EPS jumped 21.8% and 11.4%, respectively. The stock currently carries a Zacks Rank #1 and has a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

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