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This chip stock is poised to reverse a 'long-term downtrend,' says market watcher

Why these strategists say Micron seems like better chip stock buy than AMD

Another day, another call on the closely watched chip stocks.

Bank of America upped its target on Micron on Thursday on a rebound in chip prices, while Mizuho downgraded Advanced Micro in a valuation call.

In the last year, AMD has been the clear winner between the two names. It has almost doubled, while Micron has shed 22%. But Piper Jaffray's Craig Johnson and Joule Financial's Quint Tatro agree it's Micron's time to shine.

Both stocks are at "interesting inflection points," Johnson said Thursday on CNBC's "Trading Nation," but he's "betting" on Micron, saying it looks better from a relative perspective and noting that the stock's chart is signaling a move to the upside.

"Looks like the stock has made a double bottom. It's poised to break out and reverse that longer-term downtrend," he said.

Micron is also back above its 50- and 200-day moving average levels, which are technical indicators used to determine a stock's long-term trend.

Johnson is closely watching the $45 line, which has provided resistance in the past, and he believes that if the stock breaks above it, investors will come aboard. The stock was trading around that level in Friday's premarket.

Joule Financial's Quint Tatro is also betting on the stock, citing solid fundamentals.

"Micron suffered a double whammy. Not only did it go down with the DRAM pricing glut, but ultimately 50% of Micron's revenue is from China, so it's extremely susceptible to headline risk," he said.

The Boise, Idaho-based company has rallied roughly 40% this year, and Tatro believes a "great balance sheet" and improving forward earnings will continue to drive it higher.

The semiconductor stocks have been caught squarely in the trade war crosshairs and are especially sensitive to U.S.-China relations. The SMH, which tracks some of the biggest names in the space, has whipsawed back and forth based on any whiff of progress in negotiations — or lack thereof.

From January through much of April the SMH led the market higher, soaring 40% and hitting an all-time high of $120.71 on April 24. But in early May, stalled U.S.-China trade negotiations hit the sector hard, and it broke below $100 at the end of that month. It has been slowly climbing ever since and is now trading around the $116 level.

Tatro believes Micron has been unfairly hit by geopolitical tensions, and that clarity on trade policy will boost the stock.

"As the headline risk abates with China, this is a stock that I think can really pick up some momentum and really play catch up. So we're long Micron and I would still be a buyer here," he said.

Disclosure: Joule Financial owns shares of Micron.