Micron shares jump as Morgan Stanley upgrades stock on AI-driven memory boom

Micron Technology shares climbed more than 4.5% to $196.32 in premarket trading after Morgan Stanley upgraded the stock to “overweight” from “equal-weight” and raised its price target from $160 to $220.

The brokerage said that multiple quarters of double-digit price increases could drive substantial earnings upside and clear lingering doubts about the adoption of HBM3e memory chips.

Morgan Stanley cited stronger-than-expected DRAM pricing and easing concerns around high-bandwidth memory (HBM) for artificial intelligence applications.

The bank believes Micron can sustain its market share in the HBM segment through 2026 despite trailing South Korea’s SK Hynix in shipment volumes, while robust DDR5 pricing could help offset any margin concerns.

MU stock one of S&P 500 top performers, but more upside seen

Micron shares have surged 123% so far this year, making it one of the top performers on the S&P 500.

Even with the stock trading near its 52-week high and carrying a price-to-earnings ratio of 24.75, Morgan Stanley believes there is more room to run.

Analysts said that sentiment has yet to turn universally bullish, suggesting further upside as the market begins to recognise Micron’s improving fundamentals.

The upgrade reflects broader optimism that the global memory chip industry has entered a new phase of growth, driven by the explosion in AI data centre demand.

Micron, one of only a few companies capable of producing DRAM and NAND flash memory at scale, stands to benefit significantly from this trend.

Artificial intelligence reshaping the memory industry

Historically, the memory industry has been cyclical, with demand tied to smartphones, personal computers, and conventional servers.

The rise of AI, however, has altered those dynamics.

High-bandwidth memory used in AI systems requires several times more wafer capacity than traditional DRAM, tightening overall supply and pushing up prices.

Projects such as OpenAI’s “Stargate” initiative are also contributing to surging demand for advanced memory chips, leading some analysts to predict a longer-than-usual upcycle.

The industry’s traditional two-year boom-and-bust rhythm may now give way to a more sustained period of expansion.

Micron has recently showcased its technological leadership by becoming the first company to ship the 1y DRAM node to the market, a milestone that strengthens its competitive edge.

Record results cap a strong year

On September 23, Micron reported fourth-quarter results for the period ended August, posting revenue of $11.3 billion—up 46% year over year and slightly ahead of analyst expectations.

Adjusted earnings per share came in at $3.03, beating Wall Street’s estimate of $2.86.

Chief Executive Sanjay Mehrotra described fiscal 2025 as a “record year” for the company and said Micron is “uniquely positioned to capitalise on the AI opportunity ahead” as the only US-based memory manufacturer.

For the current quarter, Micron guided for revenue of around $12.5 billion, representing a 44% jump from the same period last year.

Television personality and market commentator Jim Cramer echoed the bullish sentiment, telling investors that Micron remains a “great buy-and-hold” stock with potential to reach $200.

With AI accelerating global demand for high-performance memory, investors appear increasingly convinced that Micron’s momentum is far from over.