Micron Technology (MU) shares are climbing in Monday's premarket session, up about 2.5% to $742.72, as chip stocks try to shake off last week's inflation-driven profit-taking. The broader market is mixed—Nasdaq futures are only slightly higher—but investors are starting to look past the near-term noise and focus on the long-term AI story.

The rebound comes after a hotter-than-expected consumer price index reading knocked the PHLX Semiconductor Index down more than 3% last week, triggering a wave of profit-taking across semiconductor names that had been riding high on AI enthusiasm. The selloff also kept the spotlight on ongoing U.S.-China tensions over advanced AI chip exports.

NVIDIA (NVDA) fell 2.84% to $229.05 in premarket trading, while Broadcom (AVGO) dropped 2.79% to $427.50. The geopolitical drama got an extra twist when NVIDIA CEO Jensen Huang joined President Donald Trump's delegation to Beijing. Meanwhile, NVIDIA said its China-compliant AI chips still haven't gotten the green light for commercial sales in China—pressure that has already shrunk China's contribution to NVIDIA's revenue.

China Exposure Keeps Micron in Focus

China is still an important piece of Micron's business, accounting for about $3.4 billion, or roughly 12% of total revenue, last year. But the company has been navigating Beijing's 2023 restrictions on Micron products used in critical infrastructure systems. Earlier reports suggested Micron exited China's domestic data center market after weaker demand, but it continues to supply chips to Chinese customers running overseas data centers, including Lenovo Group (LNVGY). It also maintains exposure to China's automotive and smartphone markets.

So the China risk is real, but it's not a binary bet—Micron is finding ways to work around the restrictions while keeping a foothold in the world's second-largest economy.

Bank of America Goes Big on Micron

The biggest news for Micron bulls this week came from Bank of America Securities analyst Vivek Arya, who sharply raised his price target on the stock to $950 from $500. That's a nearly 90% increase in his target, and it reflects growing confidence in long-term AI infrastructure spending and tightening memory supply conditions.

Arya pointed to rising capital intensity, advanced packaging constraints, power limitations, and geopolitical pressures as factors that are making memory supply structurally tighter. He also highlighted Micron's plans to spend more than $25 billion in fiscal 2026 capital expenditures. But don't expect those investments to pay off overnight—meaningful supply additions from projects like the Idaho fabrication facility and the Singapore advanced packaging plant may not arrive until 2027 or later.

According to Arya, accelerating AI infrastructure investments from tech giants like Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Oracle (ORCL) could keep memory pricing power tilted in suppliers' favor through at least 2028. That's a long runway for Micron to capitalize on the AI boom.

Earnings and Analyst Views

The next big catalyst for Micron is its earnings report, expected around June 24, 2026. Wall Street is looking for earnings of $19.15 per share, up from $1.91 per share a year earlier. Revenue is projected to rise to $33.51 billion from $9.30 billion in the prior-year period. That's a staggering jump, driven by AI demand for high-bandwidth memory and other advanced chips.

Micron currently trades at about 34.2 times earnings, which is a premium valuation relative to peers. But analysts seem to think it's justified. The stock carries a consensus Buy rating with an average price target of $561.88—though that average is likely to move higher after Arya's upgrade.

Recent analyst actions include:

• DA Davidson maintained a Buy rating and reiterated a $1,000 price target on May 11.
• TD Cowen raised its price target to $660 on April 28 while maintaining a Buy rating.
• DA Davidson also initiated coverage with a Buy rating and a $1,000 price target on April 28.

So there's a wide range of views—from $500 to $1,000—but the overall sentiment is bullish. The key question is whether Micron can deliver on the AI promise while managing the China headwinds and the cyclical nature of the memory market.

For now, the market is giving Micron the benefit of the doubt. But with inflation still lurking and geopolitical tensions simmering, the path forward won't be a straight line.