Tariff Hangover Sees Micron Stock (MU) Plotting AI-Driven Comeback

Micron is bouncing back fast from a painful downturn. Recently, revenue tripled on surging AI demand, margins nearly doubled year-over-year, and now analysts forecast a 66% upside potential. Economic worries linger, but the chip rebound appears underway, making Micron attractive again.

Micron Technology Inc (MU) knows all about the ups and downs of the memory chip industry. After enduring a brutal downturn through 2022 and 2023, when chip prices and profits sharply fell, Micron’s latest results highlight a stunning recovery.

The company’s data center revenues tripled year-over-year thanks to booming demand for artificial intelligence (AI). This turnaround sends a clear message to investors familiar with Micron’s cycles: The storm clouds are parting, and Micron is now positioned to thrive in the sunny upswing driven by the AI revolution. Given the risk factors overshadowing all stocks, I’m tentatively bullish.

With Donald Trump seemingly stepping back from the brink of an all-out trade war with several nations, equity markets are gradually recovering. Stocks like Micron Technology stand out as strong candidates for a snap rebound back to prevailing long-term uptrends.

Micron’s Innovative Memory Tech

What makes Micron particularly compelling is its position at the intersection of AI, memory, and storage. Today’s large AI models and cloud applications require huge amounts of DRAM and ultra-fast memory, such as High Bandwidth Memory (HBM), to efficiently feed data to GPUs and specialized processors. Micron is deeply invested in meeting this growing need, rapidly developing cutting-edge products, including HBM3E high-bandwidth memory, advanced DDR5 DRAM, and high-density NAND flash. These technologies are becoming essential components in modern AI servers and data centers.

Just a year ago, Micron was caught in one of the worst memory chip famines in recent history. But today, the company isn’t just benefiting from the industry’s rebound; it’s actively fueling it through its leadership in product innovation. The memory chip niche within the semiconductor industry went through a severe downturn in 2022 and 2023, with established companies like Micron, Samsung (SMSN), and SK Hynix facing excessive inventories, falling prices, and reduced demand — especially after the COVID-fueled boom in electronics had faded. Micron and others responded by cutting production and capex to rebalance supply and demand.

Consider Micron’s financial turnaround: After a rough FY2023, Micron posted a net loss of $5.83 billion as revenues fell sharply by 40%. However, by FY2024, the company remarkably recovered to post a profit of $778 million on sales of $25 billion. This positive momentum has continued into FY2025. In Q2 alone, Micron’s GAAP gross margin surged to 36.8%, nearly doubling from just 18.5% the year before. This dramatic improvement illustrates a significant market shift from oversupply to tightening demand. Crucially, Micron returned to profitability, reporting GAAP earnings per share (EPS) of $1.41 and non-GAAP EPS of $1.56 for the quarter.

Navigating Economic Uncertainty Is Crucial

While Micron’s business outlook has improved, broader economic uncertainties persist. Investors today face an unusual economic scenario. The yield curve, especially the spread between two-year and ten-year Treasury bonds, was notably inverted through 2022–24. An inverted yield curve often signals an upcoming recession. Recently, this inversion has begun to reverse, indicating that markets anticipate the end of Federal Reserve interest rate hikes.

For semiconductor investors, this creates an interesting paradox. While a mild recession could dampen near-term demand for electronics, markets typically anticipate such slowdowns in advance. With the yield curve now flattening, we appear to be in the late stage of the economic cycle.

Historically, technology stocks, particularly cyclical sectors like semiconductors, tend to hit their lowest points before the overall economy bottoms out, as investors look beyond the downturn to future growth. For Micron, the macroeconomic concerns are real but likely already reflected in the stock’s current valuation.

Why a Contrarian Approach Might Pay Off

With Micron, as with other cyclical companies, investors often achieve the most significant returns by investing during periods of pessimism. We appear to be in that cautious, uncertain early phase of a new growth cycle. Many investors are wondering whether this recovery is genuinely sustainable.

But history shows that these moments can lead to significant gains, especially when skepticism remains strong. It’s similar to the market sentiment toward Micron in late 2015 or 2019, periods when the stock was widely overlooked, only to rally strongly in subsequent years. With AI, 5G, and enterprise IT upgrades set to drive higher memory chip demand through 2025 and 2026, Micron is ideally positioned to benefit.

Micron is deeply integrated into these key tech trends, providing products such as LPDDR5X memory for AI-driven smartphones and high-capacity SSDs essential for cloud infrastructure. Not surprisingly, CEO Sanjay Mehrotra references the company’s current market status as “the best competitive positioning in Micron’s history.”

Is MU a Good Stock to Buy Today?

On Wall Street, MU stock carries a Strong Buy consensus rating based on 21 Buy, three Hold, and zero Sell ratings over the past three months. MU’s average price target of $129.65 implies approximately 66.5% upside potential over the next twelve months.

See more MU analyst ratings

Although there haven’t been new analyst ratings since recent tariff adjustments, my own outlook remains bullish. I anticipate significantly improved macroeconomic conditions by the first half of 2026.

Micron’s Quiet Rise as an AI Leader

Micron’s recovery isn’t just theoretical—it’s happening right now. After enduring one of the harshest downturns in the memory chip industry, Micron has emerged more vigorous, focused, and strategically aligned with influential AI growth trends. Yes, economic uncertainties remain, but the cyclical nature of the semiconductor market means the best returns often come to those willing to buy when sentiment is still cautious.

Micron may not be the flashiest player in the AI space, but it’s quietly becoming indispensable. Its strategic focus on AI infrastructure, improving margins, and a robust product lineup anchored by HBM3E, DDR5 DRAM, and advanced NAND flash memory positions the company for substantial growth ahead.

Investors who wait for complete economic clarity risk missing the opportunity. As in past cycles like 2016 and 2020, significant rewards often go to those who act before the crowd does.