German construction sector still in recession, civil engineering only bright spot
Investing.com -- Micron Technology could be heading into a stretch of unusually strong earnings as prices for its core memory products rise sharply while demand for artificial intelligence chips fuels interest in its high-bandwidth offerings, Morgan Stanley said upgrading the stock to Overweight.
The brokerage said checks across the memory supply chain point to double-digit quarterly price increases for DRAM, Micron’s main profit engine, in both the current and following quarter, with buyers increasingly worried about availability through 2026.
That tightness, it said, could last several quarters, driving repeated earnings upgrades.
DDR5 server memory prices are already up about 15% since Micron last reported results, and Morgan Stanley said spot pricing suggests its estimates may still be conservative.
At the same time, earlier concerns that Micron might struggle to compete in high-bandwidth memory (HBM) used in AI accelerators appear to be easing.
While the company may trail SK Hynix by a quarter in volume shipments of its next-generation HBM4 product, Morgan Stanley said its technology remains competitive and demand should be strong enough for Micron to keep a low-20% market share in 2026.
Crucially, the improving DRAM backdrop is helping Micron secure better pricing on HBM, with some customers willing to accept smaller price declines than expected.
That means HBM margins should hold up even as specifications rise to meet new chip requirements.
Micron shares have already rallied this year, but Morgan Stanley said the stock could still climb if earnings rise towards $5 a share, a level it sees as achievable if memory prices improve by roughly 15% from here and gross margins expand. It lifted its price target to $220 from $160.
“The next 6-12 months seem so strong,” the analysts wrote, adding that short-term pricing momentum matters more than longer-term valuation.