Semiconductor Stocks Rebound. The Case for Buying Micron and STMicroelectronics. -- Barrons.com

By Doug Busch

The semiconductor cycle is turning, and Micron and STMicroelectronics represent two of the cleanest vehicles to play the rebound.

Memory supply is tightening rapidly as artificial-intelligence server demand requires vast amounts of high-bandwidth memory, while NAND flash memory pricing has found a firm bottom and begun to trend higher. This environment positions Micron at the leading edge of an earnings recovery.

STMicroelectronics, a Swiss-based chip maker whose customers include car makers and other manufacturers, offers exposure to the other side of the cyclical turn. Automobile and other industrial supply chains have largely cleared excess inventories, and order books are stabilizing.

Both equities currently discount a far shorter, shallower recovery than operational data imply, presenting compelling value at current price levels.

The broader semiconductor space is showing robust institutional demand, with the VanEck Semiconductor exchange-traded fund (ticker: SMH) currently riding a five-week winning streak. Four of those five weeks closed near the absolute top of their weekly ranges, a clear signal of persistent buying pressure. Over the last two weeks, the SMH has significantly outperformed the iShares Expanded-Tech Software Sector ETF (IGM), reclaiming market leadership after software stole the spotlight during the chips' summer lull. Last week, it decisively cleared a bull flag breakout trigger at $610, establishing a projected measured move target of $680. That momentum was broad-based, with eight large-cap chipmakers scoring weekly gains of over 10%, including Applied Materials, a name I wrote about two weeks ago.

Let's turn to Micron and STMicroelectronics to lay out why I am bullish on the names into year end.

Looking at Micron's daily chart, the ratio chart against memory rival SanDisk suggests a potential breakout above a bearish descending triangle that has been building since August, following a strong push higher in July. This consolidation comes after a dizzying run earlier in the year, where the stock surged 303% from a bullish harami on March 31 to a bearish hanging man on June 25.

That massive advance ended abruptly with a bearish island reversal on June 23, accompanied by a steep 13% gap down. Shortly after, three consecutive doji candles from June 26-30 carved out a local top. However, price action stabilized in early July as a bullish inverse head-and-shoulders pattern developed at the very round $1,000 level, which the stock successfully took out on September 4.

With a bull flag now established directly above that breakout zone, the chart is coiling for its next directional move. A break above the $1,100 trigger could lead to a very quick move to $1,300 by year end, representing a 21% gain from current prices. Remain bullish above $1,025.

Micron was trading around $1,063 Monday.

Turning to the chart for STMicroelectronics, the ratio chart against the SMH delivered a strong second-quarter surge. While the ratio chart subsequently surrendered most of those gains, it recently broke out above a bullish falling wedge to signal that relative momentum is returning. On the absolute price chart, the retreat originally began with a June 22 doji candle, initiating a multi-month consolidation that built the left side of a potential cup base.

The right side of that base took shape on September 22 as the stock cleared a bearish descending triangle, a classic reminder that false breakdowns often trigger fast moves in the opposite direction. Buyers followed through aggressively on Friday with a 7% gap-up that completed a bullish island reversal, following a 19% post-earnings gap-down on July 23.

This island reversal extends a strong momentum turn. It is currently riding a six-session winning streak and has closed higher in 12 of its last 14 trading days. The stock could reach $80 by early 2027, a 40% gain from current prices. Remain bullish above $52.

STMicroelectronics was trading around $57 Monday.

Doug Busch is the senior technical analyst at Barron's Investor Circle. His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.

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October 05, 2026 13:38 ET (17:38 GMT)