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Investing.com -- Morgan Stanley has issued a double upgrade on Taiwan-based Macronix International (TW:2337), lifting the stock to Overweight from Underweight and raising its price target to NT$29 from NT$16.5.
The bank sees Macronix as a prime beneficiary of a pricing uptrend in NOR and SLC NAND flash memory, which together account for around 70% of the company’s revenues.
“Our double upgrade is mainly driven by the strong pricing trends,” analysts led by Daniel Yen said, with NOR flash expected to remain in undersupply into 2026 and high-density SLC NAND facing a severe shortage due to capacity reductions at Kioxia and Micron.
They forecast Macronix will swing to profitability in 2026 as elevated prices support a turnaround.
Morgan Stanley raised its earnings outlook, projecting 2026 EPS at NT$0.09 and 2027 EPS at NT$0.57, compared with previous forecasts of losses.
That reflects more optimistic assumptions for wafer average selling prices. Specifically, the bank expects NOR up 6%, 30% and 32% in 2025–27, and NAND up 1%, 8% and 8% over the same period.
The analysts also highlight that while the market has in part priced in the ongoing rally, “structural supply-demand imbalance suggests a more sustainable price increase.”
Potential risks include unexpected production increases by rivals or weaker end-market demand.
Beyond Macronix, the bank reiterated Winbond Electronics (TW:2344) as its top pick, raising its target to NT$38, citing strength in DRAM, NAND and NOR.
GigaDevice’s (SS:603986) target was lifted to RMB234 on better specialty DRAM and NOR flash trends, while Powerchip Semiconductor’s (TW:6770) was raised to NT$22.
Across the sector, Morgan Stanley expects ongoing tightness in legacy memories as AI-driven demand cannibalizes capacity, creating “multiple new drivers of AI-led memory strength.”