Shares of Micron Technology (NASDAQ:MU) jumped about 6% premarket on Monday after Morgan Stanley upgraded the stock’s rating to Overweight from Equal-weight.
The firm also raised the price target on Micron’s stock to $220 from $160.
“Micron is pushing the envelope on valuation as the group rallies, but we believe we are looking at multiple quarters of double digit price increases which can lead to substantially higher earnings power – and resolve any lingering questions on specialty high bandwidth memory for AI,” said analysts led by Joseph Moore.
The analysts noted that momentum on core DRAM pricing continues to surprise them, at the same time, near-term worries on High Bandwidth Memory, or HBM, are being solved by DRAM economic improvement.
Dynamic Random-Access Memory, or DRAM, and NAND are two different types of memories.
The analysts said that DRAM and NAND checks continue to inflect positively with buyers showing anxiety about availability through all of 2026 amid strong server and storage demand.
Moore and his team added that concerns about specialty memory for AI — HBM — are easing, as the stronger DRAM backdrop helps negotiations for HBM3e.
The analysts noted that the combination can drive multiple quarters of upward EPS revisions.
“Our checks in DRAM continue to get stronger, with potential for double digit sequential price improvement calendar 4q and 1q, and while the direct causes are hard to pinpoint, sentiment from our industry contacts that DRAM may be tight for several quarters is increasingly widespread amongst our contacts in the purchasing world,” said the analysts.
The analysts added that while Micron has outperformed, they see more room to run as upward revisions continue (DDR5 spot pricing already up 15% since Micron guided) and sentiment (mainly due to HBM concerns) is not yet universally positive.
“Stock is very expensive on through cycle metrics, so we need to be right on short term – but conviction from our purchasing contacts is very high,” said Moore and his team.